Self Sovereign Identity
Say Goodbye to Passwords and Hello to Self Sovereign Identity
Have you ever thought that it would be very convenient to have a digital identity that allows you to log in to all your online accounts, share information and communicate with a variety of partners?
We all know the struggle of remembering multiple passwords and email addresses from various online accounts. Sometimes you can use a fingerprint, sometimes you can log in with Google, Amazon, or Facebook, for example. But if you choose the second option, have you ever thought about what these big companies do with your personal data?
By allowing them access to multiple of your digital accounts, they become owners of your digital identity.
To be honest – shouldn’t you be the owner of your digital identity? And able to decide what information you want to share and with whom?
Secure Your Data, Control Your Identity: The Power of Self Sovereign Identity
Well, I have good news for you. All of this is made possible by something called Self Sovereign Identity (SSI). This technology gives only you full control over all attributes and actions of your digital identity.
Unlocking the Potential of Self Sovereign Identity: What You Need to Know
In this article I would like to familiarize you with this new technology and its possibilities. It defines SSI, and explains its importance, main principles, and components.
In addition, this article will present both the benefits and the challenges and limitations of SSI technology, and finally show some practical examples and use cases of Self Sovereign Identity in general and its relevance for SAP.
Lastly, we will think about the future and how SSI and decentralized identities might evolve.
A New Era of Digital Identity: How Self Sovereign Identity is Revolutionizing the Web
Portable or digital identity is 3-5 years away from mass adoption. But already now it is being used frequently and we can see strong signals of adoption. Large ecosystems are forming around this technology as well as big tech companies investing and betting on it. For example, in Europe a digital portable identity (eID) will be built on SSI. Ecosystems for carbon footprint tracking are leveraging SSI and large corporations such as Microsoft are seeing big opportunities.
One major benefit we will revisit in more detail later is that digital identity’s future aligns with many emerging technologies and concepts, including blockchain, AI (such as ChatGPT), and Web3. We also have a term called Web5, coined by Jack Dorsey’s company Block TBD, which refers to a hypothetical next stage of the internet that would be characterized by decentralized, open protocols and distributed applications.
For more information on Web3, feel free to check out our page about it: Web3 | Digital Technology and Innovation Management | SAP Community
If you’re generally interested in these new digital technologies, you might enjoy reading the following blogposts and articles:
- Metaverse | Digital Technology and Innovation Management
- Virtual Reality in Business | Digital Technology and Innovation Management
- Is the Metaverse only a Virtual Reality? | SAP Blogs
- Metaverse Technology – An intersection of trending concepts and technologies | SAP Blogs
Status Quo: Centralized Identity and Federated Identity
Before we jump into the definition of Self Sovereign Identity and ask ourselves why it is important, we should take a closer look what we currently have – the two patterns how digital identity exists now:
On the one hand we have centralized identity which means that each service an individual or a company uses has its own part of personal information and its own new form of authentication. You use – for example – a different password or maybe even a different mail to log in into LinkedIn, twitter, Amazon or Zalando. As a result of that you own several different accounts.
On the other hand, we have federated identity. This type of identity is one step beyond centralized identity. You may have crossed it already when a pop up asked you whether you would like to log in with Facebook or for example with Google.
The big disadvantage of federated identity is that such big companies as Facebook, Amazon or Google now control and monetize all personal ata. Which is obviously not great because the user should be in control of their own data. As a result of that, a social log in (federated identity) would never be used for an official account such as for government services. A bank would not allow to log in with Facebook.
“We cannot build services for the post-industrial age using the identity infrastructure of the industrial age. We need a new digital identity infrastructure” (David Birch)
Which brings us to the SSI technology and is where Self-Sovereign Identity considers it. Self Sovereign Identity gives us the same convenience that a social log in has but the users control their data and not a big corporation. Within SSI we have an open and global standard for digital identity. This is a breakthrough and will present new opportunities for individuals and businesses.
What is Self Sovereign Identity (SSI) and why is this decentralized identity important?
Self Sovereign Identity (SSI) is a digital identity which brings digital identity infrastructure on a new and next level. SSI gives full control of all attributes and actions of a digital identity to its holder, which can be an individual, a corporation, a physical object, as well as an abstract entity. SSI allows individuals, businesses, etc. to control their personal data and identity online without relying on centralized authorities like large corporations.
The personal data is brought back under the control of the user while supplying the convenience of a federated login.
SSI is a decentralized and open source framework that allows individuals to create, manage and share their identity attributes in a seamless, password-free user experience. This is done while supporting privacy, security and interoperability – the user has full power and authority over their digital identity, personal credentials and data. All this is possible without centralized components.
With Self Sovereign Identity, individuals can decide with whom they want to share their data and how they want to store or use it.
The importance of Self Sovereign Identity (SSI) lies in its potential to give an individual full control over their personal data. With Self Sovereign Identity it will no longer be necessary to rely on centralized authorities to verify and authenticate the own identity. The risk of hacks, data breaches as well as for example “errors” is reduced tremendously.
Furthermore, the importance of SSI can be underlined with a closer look at some key principles of this technology. But before that let’s avoid any confusion and do a quick explanation of terms:
Self Sovereign Identity vs. Decentralized Identity
Self Sovereign Identity is a Decentralized Identity. Which means that all information or personal attributes associated in the Self Sovereign Identity are not controlled by any other server or central authority than the owner (individual, corporation, etc.) itself.
Key Principles of SSI
SSI ensures privacy and security with the use of digital signatures, strong encryption, and other cryptographic tools. It is also very secure because with SSI it is no longer necessary to use centralized databases that are likely to get hacked or being victims of data breaches.
A prerequisite to this is that SSI is decentralized, which means that there is no server or central authority that controls any identity information. Instead, all the information is stored locally on an individual’s personal wallet.The Distributed Ledger Theory (DLT) is only used to keep track of verifiable data, like revocation lists or Decentralized Identifiers (DIDs), which act like a phone book. None of an individual’s actual identity information is stored on the ledger.
Another very important key element of the Self Sovereign Identity Technology is that different SSI systems can exchange and communicate data with other SSI systems, while keeping privacy and security. In technology, this is called interoperability and portability. Moreover, Self Sovereign Identity enables individuals to easily move their digital identity across different platforms and services, without losing control over their personal data.
All these principles make SSI a powerful tool for individuals to take back control of their digital identity and personal data, while enabling new use cases and business models that rely on trust, security, and transparency.
Take Control of Your Digital Footprint with Self Sovereign Identity
SSI is a transformation of how we manage our digital identities and interact with online services. The individual or the company itself do now have greater control over their personal data and identities. This will lead in increased security in online transactions, reduce fraud, enhance privacy, and most importantly trust in any kind of process or transaction.
Finally, SSI will be globally valid across different contexts. Self Sovereign Identity proves a model for a new “web of trust” where personal data, sharing of personal data, consent management, and management of credentials are not controlled by corporations anymore, but instead by the individual itself.
As we will see later in more detail, Self Sovereign Identity (SSI) enables new use cases as well as business models. Just to name a few, some possible examples could be decentralized finance, digital onboarding processes as well as application processes of any kind.
Regarding this, the disruptive potential of SSI, is among other benefits, to cut friction during establishment of relationships between businesses (B2B), individuals (B2C), or even objects.
Self Sovereign Identity builds a huge opportunity to shift the paradigm in the way we think about digital identity as well as online privacy. The SSI technology can empower individuals, a company, a corporation, a physical object, and an abstract entity to take back control of their personal data and identity in an online environment.
Components of Self Sovereign Identity (SSI)
The most important components of Self Sovereign Identity are digital identity attributes, identity issuers and verifiers as well as identity wallets and agents.
Digital identity attributes are any kind of personal details that belong to the credential holder and make up an individual’s digital identity. This might be pieces of information such as the name, birth date, and address.
With the SSI technology, individuals have control over their own digital identity attributes and can choose which ones to communicate with or exchange with others.
SSI also consists of identity issuers and verifiers. Possible credential issuers or credential verifiers are entities or organizations that issue or verify an individual’s digital identity attribute. For example, a company might issue a digital attribute such as a university certificate for the application process, and a bank might verify an individual’s credit history and income.
Own Your Identity: How Self Sovereign Identity is Changing the Digital Landscape
Identity wallets are digital wallets an individual stores their digital identity attributes in – the digital wallet might be the key part of Self Sovereign Identity. Normally, these identity wallets are encrypted and secured using cryptographic keys. SSI is built on public key cryptography. The private key resides in the wallet, for example on a cell phone. In this scenario the private key is in the wallet on your phone.
As a private key, only the individual has control over the data and information it protects. Stealing and controlling the private key is highly difficult for a thief, requiring them to gain control of the individual’s phone, bypass its authentication mechanism (such as Face ID or Touch ID), and extract the private key from the secure enclave. This level of security is far more advanced than a physical wallet, which can easily give a thief access to all the information at once.
In this whole scenario the agents are the software applications or services that help individuals to use, communicate, exchange, and share their digital identities. These agents can perform a variety of functions such as verifying credentials, requesting identity verification, and facilitating secure communication between different parties.
All these components work together and follow one common goal: the creation of a decentralized and user-centric digital identity system in which the individual has control over their personal data and identity in the online world. Within the SSI technology, the individual can share their digital identity attributes with others selectively, whilst maintaining privacy, security, and control at any point in the process.
Advantages and Benefits of Self Sovereign Identity
Generally, SSI is way more efficient because now we have for example completely automated payment flows. Furthermore, it is incredibly transparent. For example, a smart contract would have a payment protocol and would be completely auditable.
Beyond that, SSI is based on decentral technology: It will be the way that whenever you use web3 or the metaverse or DeFi (Decentralized Finance) it is tight to an identity which shows us the incredible power of SSI technology.
But let us take a closer look at four main advantages that come along with the use of Self Sovereign Identity. Improved privacy and security, greater control and ownership over personal data, enhanced trust and transparency as well as the potential for new business models and use cases are some of the key advantages and benefits of Self Sovereign Identity (SSI).
In more detail, improved privacy and security means that SSI provides individuals with greater privacy and security regarding their personal data and digital identity. Self Sovereign Identity eliminates the need for centralized databases that are easily vulnerable through hacks or data breaches by decentralizing the storage and also the management of identity information. And moreover, SSI uses strong encryption and other cryptographic tools to protect the identification of information and ensure that it is only accessible to entities with the access authority from the individual.
This results in our next advantage: greater control and ownership over personal data. Not only that, the individual has complete control over the digital identity and connected personal data and therefore the decision power which identity attributes to share, with whom, and for what purpose. But also, the fact that individuals can revoke access to their identity information at any time. This results in a greater control over how the personal data is used and shared.
From Trust to Transparency: The Benefits of Self Sovereign Identity
And finally, of course the most important but also most fragile component and advantage: trust and transparency. Whilst supplying verifiable credentials and digital signatures, Self Sovereign Identity enables trust and transparency in digital interactions. These digital signatures can be used to authenticate individuals and transactions. In addition, SSI supplies a decentralized and tamper-proof record of activity identity interactions, which helps the auditing and tracking of digital identity transactions.
Challenges and Limitations of SSI
Before we jump into legal and regulatory issues let’s start with some basic facts. Typically for new technologies we are faced with the adoption and awareness challenge.
One of the main challenges facing Self Sovereign Identity is that most people are not aware of it. That’s why I am happy you made it so far and are on our page to inform yourself about SSI.
Easy enough, when you are not aware of SSI, you cannot adopt it nor be aware of its potential benefits. Generally, most companies and people are hesitant to adopt new digital identity systems.
Moreover, SSI requires a huge shift in everyone’s behavior and mindset. Now the individual must take an active role and act as the person responsible for its personal digital data – as funny as it might sound.
Technical Challenges of Decentralized Identity
Furthermore, SSI is technically quite complex – since it relies on advances cryptographic tools as well as a blockchain-based infrastructure – and might be difficult to understand for non-technical users.
Interoperability between different SSI systems might also be a challenge, as different systems may use different protocols and standards.
And of course, there are some legal and regulatory challenges, especially when it comes to privacy and data protection. Self Sovereign Identity systems must follow a range of legal and regulatory frameworks, such as data protecting laws and many more. Generally, the legal status of digital credentials and signatures is still uncertain.
The biggest challenge might be trust. How can we trust a software?
There is only so much you can do to create trust. At some point we reach a level where technology reaches a limit and where a link to a human being, a corporation, a real-world identity is necessary.
Taken together, overcoming these challenges will be important to enable broader adoption and unlock the full potential of decentralized and user-centric digital identity systems.
Real-World Examples and Use Cases of SSI
One example for a use case would be an onboarding and job application process. The questions to ask would be how these processes might change with SSI and which advantages would appear.
When it comes to onboarding processes as well as to job applications the company has to check many credentials such as criminal records, university certificates, etc. This process involves a lot of different steps and parties; especially when the applicant comes from a different country.
The more parties evolved the most likely to become unreliable and time-consuming. But what if the applicant had a digital wallet with all its credentials on it?
Then the whole process would be reduced to seconds and would be very cheap as well. Furthermore, there wouldn’t be any paper involved.
It would make sense to create a digital wallet for job applicants. All an applicant now had to do would be to scan the QR code and share their digital wallet with all the credentials. And this would be all that needs to be done. And another big advantage: a digital wallet is much more unlikely to get lost than a real one!
Future of Work Technologies and Self Sovereign Identity
Other potential use cases which connect with the future of work transformation and the metaverse would be onboarding employees, customer training and more.
Overall focus of all the prototypes is to show how simple a process can be with the SSI technology – you basically just need to scan a QR code.
Decentralized Finance with Decentralized Identity
Furthermore, there is not only identification possible but also payment. We could ask ourselves what it would look like if it were like a decentralized financial payment. Automatic payment between two business partners. Self Sovereign Identity enables secure and streamlined identity verification and can therefore reduce the risk of identify fraud and comply with know your customer (KYC) and anti-money laundering (ANL) regulations.
So, we could use smart contracts, which are auto charged and have a super-fast reconciliation time during which one smart contract pays another smart contract. Within SSI a secure and temper-proof record of identity interactions can be guaranteed, which makes it easier to audit and track financial transactions.
This is a very important point since DeFi is very important when it comes to SSI. And also, for new and upcoming technologies such as metaverse and Web3.
After looking at these examples and using cases, the huge potential of Self-Sovereign Identity becomes obvious. This reformative digital identity system enables privacy, security, and control over an individual’s personal data, while unlocking loads of new opportunities for collaboration as well as innovation.
Why is a Decentralized Identity such as SSI of relevance for SAP
In addition to discussing the concept of SSI and its implications for individuals, it is important to also consider its impact on corporations under the umbrella term of “future of business networks”. Within SAP, SSI has been categorized as a key element of the “future of business networks” initiative, which holds significant potential for revolutionizing corporate identity management.
In particular, SAP’s strength in master data management gives it a unique advantage in this area. The company has a vast business network with many suppliers storing critical master data in SAP systems. However, without SSI technology, this data can be difficult to verify and often suffers from duplicate entries, resulting in a lack of data integrity and accuracy.
By using the power of SSI, SAP can achieve a “golden record” of master data, setting up a single source of truth that can be verified and relied upon with confidence. This will enable greater data accuracy and integrity across the SAP business network, easing more efficient onboarding processes and streamlined operations. Ultimately, this will enhance SAP’s position as a leader in the digital transformation of corporate identity management.
Future Prospects and Developments of SSI
After reading this whole article it becomes obvious that the future prospects and developments of Self Sovereign identity (SSI) are existing and promising.
In the following you will find some developments and key trends we might watch in the coming years.
So, for example the fact that our future of work technologies such as AI (Artificial Intelligence) and ML (Machine Learning) are expected to play an increasing role in the development of Self Sovereign Identity systems.
One clear vision and goal is the ability to live and work in an environment – or better to say – a digital world where no borders are needed. Which could for example make it a way easier way to work and travel in the USA.
This would be a result of standardization and collaboration efforts and therefore include the development of open-source protocols and frameworks.
Which would also mean an impact on society and economy: SSI will and already does transform the way we manage and use digital identity – it changes the power and behavior of every individual, that uses this technology.
All future prospects and developments of SSI have something in common – it transforms the way we manage and use digital identity.
And it is a movement to greater privacy, security, and control over our personal data.
If you are generally interested in what the future might bring regarding digital technologies and innovation, I can highly recommend you read these two blogposts:
- The Future of Work and Virtual Reality | SAP Blogs
- How a Futurist Works and Impacts the Future Direction of SAP | SAP Blogs
The Ultimate Guide to Self Sovereign Identity: Everything You Needed to Know
In conclusion, Self Sovereign Identity (SSI) brings the individuals in a revolutionary position where they can control their own data and not a big company. Therefore, it is a very powerful tool and technology which brings back the control to the actual individual.
Another big highlight of the SSI technology is that this is truly the first open standard for digital identity on the internet that has never existed before. SSI is standardized, open and not owned by anyone. It might well be a worldwide standard of changing identity soon.
The potential benefits of SSI are significant but do also need collaboration and standardization efforts to be successful. As SSI continues to evolve, individuals as well as businesses must be aware of the opportunities but also the challenges Self Sovereign Identity presents. It is and will be necessary to take steps to protect everyone’s digital identity and ensure a more secure and user-centric digital identity ecosystem.
Are you now looking to stay ahead of the game in the ever-evolving world of digital technologies and the future of work? Check out our two community pages packed with informative and thought-provoking articles and blog posts!
Whether you’re an entrepreneur, tech enthusiast, or simply curious about the future, expand your knowledge and fuel your passion for innovation.
Don’t miss out – stay tuned and check our content out now!