Microsoft to Use Bitcoin Blockchain for Decentralized ID Verification


By Landon Manning

Software giant Microsoft (MSFT) has publicly announced plans to build a decentralized identity (DID) network using the Bitcoin blockchain.

Microsoft announced its plans on May 13, 2019, describing some of the network’s planned features and early development history. Called the Identity Overlay Network (ION), the product is set to leverage the open standards made possible by distributed ledger technology, which “greatly improves the throughput of DID systems to achieve tens-of-thousands of operations per second.”

A source involved in ION’s development claimed that “it is akin to Lightning [Network], in that there is no secondary consensus among ION nodes,” according to Bitcoin Magazine. “This is just like Bitcoin, but for IDs.”

The DID will not keep records of users’ personal data but maintain a complicated log of metadata. In other words, every time an individual uses their DID in some way, it updates the log with the fact that the user is still actively in control of that account. By marrying this technology to the Bitcoin blockchain, it’s possible to ensure that all of these new instances genuinely originate from the ION.

“Unlike money, decentralized identifiers don’t have the same doublespend problem,” the source told Bitcoin Magazine. “All we need is chronology.”

Ideally, the project is intended to streamline the process of identifying personal information online, potentially making the need for a wide number of passwords and usernames obsolete. Instead of using any of the more traditional means of accessing various sites, including email and social media accounts, the DID could provide sufficient proof of identity.

Another blog post from Microsoft conceded that “The most robust, decentralized, public blockchains operate at just tens of transactions per second, nowhere near the volume a world full of DIDs would demand,” but, nevertheless, the company hopes to surmount this problem. “To tackle this challenge, we’ve been collaborating with members of the DIF [the decentralized identity foundation], notably ConsenSys and Transmute, to develop a blockchain-agnostic protocol for creating scalable DID networks, called Sidetree.”

Although this technology is being developed largely by Microsoft, it will be cost-free for users who will be able to independently operate their own nodes. All of the software involved will also be open source.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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