This is an excerpt from Finextra’s report, ‘The Future of Digital Identity 2022: Inclusive, secure, fit for purpose.’

The majority of the world's population now has some form of digital identity. These can come from our own social media presence, but also our banks and the companies we use.

“We are not in control of the number of identities we have. Governments give us an identity, a website gives us another one, and banks another one, and our friends and colleagues also give us identities. Our digital identities are already constrained by each platform in which we have an identity,” says Heather Vescent, co-chair, Credentials Community Group at W3C, and president and CEO of The Purple Tornado.

As we continue on this path as an increasingly digitalised world, the number of digital identities could lead to a convoluted web of different identities - which can be inefficient and confusing, but also open individuals and businesses up to fraud.

Self-sovereign identities (SSIs)

SSIs are designed to give an individual or a company more control over their digital identity. SSIs use digital wallets which contain identifiers that are claimed against a block in blockchain. In this way, personal identifiers and data do not need to be given to an intermediary and can be controlled by the owner of the SSI.

Much of Web 2.0 has been characterised by the harvesting of data, making this a more limited approach to personal data appealing option as we move into Web 3.0, and potentially the metaverse.

According to Erica Moreti, head of strategy and innovation and physical experience at EPAM Continuum, with Web 2.0, “digital identities are centralised and controlled by corporations and institutions that own and manage our data on our behalf. Web 3.0 will break this paradigm and give back control of data to its owners, who will decide for themselves how and when to use it.”

Moreti adds that SSIs are the “first building block for moving out data intermediaries and towards a truly decentralised exchange. SSIs would give users the autonomy, or sovereignty, over their identification data like ID numbers or emails and would enable them to share their information purposefully with the brands or other users of their choice.”

Vescent also describes the fact that SSI “puts the human at the centre of their many identities (and aspects of these identities) with the power to selectively, securely, share which aspects of their identity - some with and without credentials - with any company, government, educational institution or any others in a digital environment. SSI allows you to be both transparent and private simultaneously. And it's not limited to humans. SSI has applications for corporate identity, digital twins, and IoT devices.”

In Roberts’ view, “offering a wide range of identity services, digital identity wallets have proven to be a convenient way for individuals to take control of their digital identity data and includes what information they chose to share with whom, where and when.”

In line with this, Moreti explains that “all data linked to an SSI is a verifiable credential that identifies the user. Potentially users could link their passport number, email, medical records and biometric data to it.”

Roberts continues that by bringing physical and digital credentials together, the general administration of identity becomes a far smoother experience. Individuals can control personal data to make payments and subscribe to new services, such as a bank account, as part of the KYC process.

Roberts further adds that digital Identity gives individuals “full control of their data privacy, enabling them to securely share the right data with the right person, only when needed. Schemes like the digital drivers’ licences have been successful due to noticeable increases in safety and ease of use. People are able to transact more swiftly, without having to carry and copy physical identity documents.”

This shows that technology like SSIs can offer individuals the ability to build a consumer or business identity that is separated from their personal identity. Additionally, this offers businesses greater efficiency as there is less need for multiple processes if an individual has the same identity across all aspects of a business.

Vescent argues the technology for this is still being developed: “While the early technology is mature, we are still in the beginning days of applying this technology to use cases. As we apply it and use these early services, we will learn and iterate and build again. I believe it will take some time to see the full result of this technology.”

Will Web 3.0 truly bring physical and digital credentials together? Is this a good idea? Moreti believes that while the telecommunications, hardware and fashion industries are starting to explore offering their customers data wallets, “this could help simplify many processes and service offers and take personalisation to the next level, but it could also change the way we look into financial products and payments.”

Avatars and the metaverse

Current designers of the metaverse such as Meta and Microsoft have already made clear their intention to use avatars of individuals within the metaverse. During Meta’s 2021 Connect, Angela Chang, director of product at Oculus VR unveiled project Cambria. At the session, she mentioned that “your avatar will be able to make natural eye contact and reflect your facial expressions in realtime. This way people you are interacting with will have a real sense of how you are feeling.”

At the session, Chang added: “we want VR to be for everyone. We have to make sure that avatars represent a diverse set of human facial features and skin tones, as well as paying attention to things like glasses and beards.” While this is an attempt to be inclusive, it also shows that avatars will be able to look as similar to the person behind them as possible.

In addition to this, Microsoft announced their use of avatars in Teams in November 2021, as part of a programme called Mesh. Currently, this tool is being pitched as part of a working environment, but it is clear they intend to expand their foray into the metaverse.

According to Moreti, “avatars represent an interesting way to look at the concept of identity. Every person in the metaverse might have hundreds of different avatars or different digital identities, based on what they have chosen to share or to look like. This is reinforced by the difficulty of interoperability of metaverses and technologies. Today, the same person has different avatars in different metaverse environments, due to the lack of interoperability of metaverse technologies – meaning they can’t use the same avatar in all metaverses.”

On this, how these systems might develop over time, and what limitations might need to be overcome, Vescent questions “if the avatars of the metaverse are based on the existing digital identity paradigm, the identities created on it will be constrained to the limits of that platform. The flexibility of digital platforms to try on different identities provides an escape from IRL societal constraints (or it used to when reality was more conservative). A system with the goal to allow digital identity freedom is designed differently from one trying to capture a consumer market.”

In conclusion, Moreti also asks the key questions: “How would you segment your users in this environment? And what should you be targeting – a demographic profile or an avatar? Data doubles or data twins could be paired up with avatars, creating a totally new self or representing angles of one single person.”

Questions should be raised over the mental health implications of avatars and digital identities. While an SSI might allow an individual to separate their digital self from their real self, an avatar designed to look and move like them, might not. Additionally, an individual SSI connected to an avatar would likely perceive hacking or fraud as a direct attack on the self.

As we move further into the metaverse, considerations for mental health and individual identities will have to continue to develop, as while not the same, the implications of social media on individual mental health are widely documented.