Digital ID – Transforming New Age Business

Digital ID – Transforming New Age Business

By reducing processing time, Digital IDs are transforming the industries. Here we discusses its components, significance and the challenges faced.

To put it simply, a Digital ID is nothing but an evolved and digital version of a person’s identity card. Primarily, they are used in establishing an identity while accessing any data stored online or on a blockchain.

In its most common usage, a Digital ID is also referred to as a digital certificate which is cryptographically encrypted. Owing to such encryption, on the one hand, the data stored in a Digital ID is secured. On the other hand, the encryption ensures the credibility of the identity established.

Basically, two different keys or codes are used to encrypt a Digital ID – a public key and a private key. The issuing party or the Certification Authority (CA) signs and protects the document with their private key. The ID may be accessed by the receiving party by using the public key of the ID owner.

Components of a Digital IDs

In most cases, a Digital ID consists of the following components.

  • The public key of the owner
  • Name of the owner
  • The public key’s date of expiry
  • Certification Authority’s name
  • Digital ID number
  • Certification Authority’s  digital signature

Establishing Identity with Digital ID

As is well known, the identity of the issuer of any physical document is established by the issuer’s signature. In general, the validity of any physical document is judged on the accuracy of the authority’s signature contained therein.

Moreover, in order to further strengthen the credibility of the document, the signature may be authorised by a stamp. It may also be given a judicial authenticity or sanction by getting the document stamped by a notary.

The establishment of the author’s identity using Digital ID functions in a somewhat similar manner. In the case of digitally produced documents, the physical signature is replaced by a digital signature of the issuing authority. In the process of identity establishment, a digital signature plays two major roles.

First, it helps in identifying the author of any given document. Second, it forms an indestructible link between the author and the contents of the document.

Owing to the indelible digital signature and the link it creates, tracking any kind of alterations becomes very easy. Most importantly, any unauthorised changes can be easily identified as they do not carry the author’s digital signature.

Modern cryptographic innovations are at the core of this entire process of signing and decoding of the digital signatures. All the keys and codes used in the establishment of digital identity are cryptographically encrypted. This ensures the validity of the documents and also enhances the security of the procedures.

The significance of Digital ID

In any business environment, be it governmental or private, establishing identity and credibility is of utmost importance. This is true of commercial transactions like money transfer or loan sanction. Identity establishment is necessary even in terms of non-commercial functions like passing order or the likes.

As the business processes become all the more digitized, a greater share of documents is digitally produced. Moreover, the business trends of the present time are more inclined towards automation. Consequently, Digital ID and digital signatures are becoming all the more significant with every passing day.

In order to enable automation and online document processing, the identity of the author has to be digitally established. In order to do so, digital certificates are used and forms are digitally signed.

However, it must be noted that a digital certificate’s significance is not limited to the establishment of the author’s identity. Apart from that, the public key also ensures that the document may be accessed only by the intended recipient. This ensures the security of the process of data production and transmission.

Challenges of Digital ID

In many different ways, an identity system can have negative impacts on the lives and living of the people. Time and again, identity information has been used as a weapon of oppression and torture. For instance, one might consider the case of citizenship being denied to the Rohingya Muslims.

As in the case of the US, the identity system therein was rather accidental. The primary motive behind the incorporation of the Social Security Number was not for identification purposes. Nonetheless, it presently is the cornerstone for identity establishment in the United States of America.

Apart from these general risks with regard to the storage of identity data, digital identity is specifically prone to other issues. As with any digital platform, the risk of leakage and data mishandling prevails in the case of the Digital ID. This is especially true of times when any malicious party with substantial authority has access to the public’s identity information.

However, despite the challenges and if properly implemented, digital identification can be the safest mode of identity establishment. Primarily, it is imperative to set up a strong legal framework to regulate digital identification. This would also mean that the individuals or groups whose data is being stored are also legally protected.

Given such a protective environment, Digital ID is bound to thrive as the preferred mode of identity establishment. In its turn, this would transform the overall functioning of new-age businesses by making them significantly more time efficient, among other things.

Nidhi Arora

Contributing Editor at Wimoxez. My passion and hobby lie within this very beautiful art. Yes! It’s surely an art. An art of moulding your words into magic.

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