Digital ID Is the Future

Recently, a coalition of industry leading businesses joined forces with the Linux Foundation to establish Trust over IP (ToIP). The coalition includes IBM, MasterCard, and CULedger, among others. The fact that such big players are interested in this project should indicate how important digital ID is.

To be clear, digital ID is something that affects just about every consumer segment in the country. The fact that there isn’t wide adoption of global—or even national—digital credential standards is surprising.

But those standards do exist, most notably ones published by the W3C (World Wide Web Consortium) , and any solution that conforms to those standards should be pursued—both to reduce fraud and to prevent identity theft. Here’s how it works:

What Is Digital ID?

Digital ID is a way to verify claims and identity online. It ensures that the things that people say online are true. And exaggerated Facebook updates and Reddit stories are not the issue here. If it’s not obvious why it matters, here are a couple illustrations:

  • Travel planning. Booking flights, renting cars, and reserving hotel rooms all require a lot of personal and financial information. Manually entering several forms of credentials is slower and more susceptible to fraud than simply signing in with a digital ID.
  • Employment application. Applying for jobs can be a time-consuming process, and verifying personal information is one of the primary culprits. After uploading a resumé and cover letter, offering a simple digital ID covers the rest.
  • A strong digital ID protects consumers, businesses, and financial institutions in ecommerce scenarios. Verifying address, age, payment and more are key to preventing fraud.

Furthermore, digital ID can be used in person to enhance the credential process. For example, presenting a driver’s license to verify age brings in two possible issues. First, that the driver’s license offers much more personal information than the birthdate, which is a data privacy concern. Second, driver’s licenses can be stolen, modified, and faked; a digital ID allows issuers (like credit unions) to vouch that the information given is correct.

Any time digital ID verification and finances come into play, credit unions should pay close attention. Ensuring that credit unions and their members can enjoy safe, seamless commerce experiences online is crucial in our connected world. (Fortunately, CULedger is establishing this side of digital ID for credit union members.)

How Does Digital ID Work?

Although there is no current global standard for digital ID, the companies working on the Linux Foundation’s ToIP project are trying to create one using the Sovrin Network. To be more direct, the standard is here and getting buy-in is the next step.

A person’s digital ID is owned by themselves, making it a self-sovereign credential. Furthermore, they can decide exactly what personal information they want to share—and with whom—ensuring that they can maintain privacy.

One crucial benefit to a self-sovereign ID is that the owner of the ID controls the ID. It’s not stored in a massive database like the information in Equifax and Capital One. It goes a long way toward preventing identity theft. This is aided by the fact that it runs on distributed ledger (blockchain) technology, guaranteeing the highest level of nearly future-proof digital security.

Consumers who use self-sovereign digital ID can essentially press a button on their phone to verify any claims they make online. The vendors and financial institutions that ask for this verification can rest assured that there’s virtually no chance of fraud, saving them time, money, and a good deal of risk.

How to Offer and Verify Digital ID

To get into the self-sovereign, blockchain-powered digital ID world, the first step is to get into CULedger’s MemberPass™ Trust Registry. It sets credit unions up to verify these digital IDs online, and it’s a prerequisite to issuing their own digital IDs that fit the same growing global standard.

We’re excited by the work they’re doing. Check out more of the MemberPass™ Digital Trust Registry here.