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Intro to Decentralized Identity Technology: How Does Blockchain Cryptography Work?

Types of blockchains

The most commonly talked about feature of blockchain is that it is decentralized, meaning that there is no single organization or individual in control of all the information. In 2017, as blockchain gained a lot of media attention, critics focused on the public aspect of the platform and said that everybody could see transactions happening. However, that was the case with public blockchains, which have since evolved into different subsets of chains. Below are some main types of blockchains, their users, and purposes.

Public blockchain: The original blockchain that gained attention. Allowed for P2P (peer to peer) transactions, which was a large part of Bitcoin. Any person or company could be a part of it. Examples: Bitcoin, Ethereum

Private blockchain: Allows a number or cap of people that have access to transactions. Mostly attractive for companies because it is most similar to how they currently operate in order to keep data internal. Examples: Hyperledger, R3 Corda

Permissioned blockchain: Similar to private blockchains, except it can also control who is a part of the network and has access, which are further controls on transactions. 

Hybrid blockchain: Combines private and public features, with data private but stored on a public blockchain. Example: Dragonchain

Federated blockchain: Similar to private blockchains, but is considered to be highly private with even stricter controls. Allows for more privacy but also better visibility and accountability.

Cryptography behind blockchain

Blockchains are powered by lots of small cryptography primitives. A public/private key pair is one of these building blocks that is key for a self-sovereign identity because no third party is required. 

Public-key cryptography, also known as asymmetric cryptography, is any cryptographic system that uses key pairs: a public key that can be disseminated widely, and a private key which is only accessible to the owner. This allows for two functions: authentication, where the public key is used to verify that the holder of the paired private key sent the message; as well as encryption, where only the paired private key holder can decrypt the message encrypted with the public key. 

These authentication and encryption tools are used to unlock the blockchain.

Decentralized identity

The Decentralized Identity Foundation defines decentralized identities (DIDs) as “anchored by blockchain IDs linked to zero-trust datastores that are universally discoverable”, but that only cracks the surface of the potential of DIDs. Breaking down that statement, the three key parts of DID are blockchain IDs, zero-trust datastores, and universally discoverable. 

Blockchain IDs: The blockchain, compared to public-key infrastructure alone, cannot be censored or controlled by a central authority. With identification as a big part of today’s globalized world, blockchain IDs introduce a new level of security while being borderless. 

Zero-trust datastores: A zero-trust datastore has the ability to store private information locally in user devices while maintaining trust and authenticity globally. One way to incorporate zero-trust datastores is to require biometrics to access user data.

Universally discoverable: An important way that this approach saves companies money is that they allow businesses to share verifications. The security is not compromised, as it still requires biometrics to access the data and authentication from the new company accessing the data. All parties can cut costs by re-using secure, stored verification credentials. 


Over the last few years, identity related solutions have been on the rise. In fact, an entire ecosystem has been created for helping companies verify their customers and keep track of them in increasingly efficient ways. The only problem with such breakthroughs was that they do not often put the customer first, and they can usually tell. For example, as the people’s trust in social media has been undermined by big tech’s misuse of their data, they feel less comfortable letting their social media know everything about them. People demand a better solution that works for everyone. New identity technologies solve these concerns, align with Decentralized Identity Foundation standards, and are committed to providing secure, stored decentralized identity solutions. Now is the time to implement solutions, as identity management costs and issues are only rising as technology is used more. 


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