Cardano and decentralized identity
Introduction of Cardano
Cardano is a decentralized blockchain technology company that aspires to be much more than a fleeting, trendy cryptocurrency. Charles Hoskinson, the co-founder of Ethereum and co-founder of the Input Output Global (IOG) blockchain engineering company, founded Cardano in 2015 with the goal of creating a more advanced, inclusive, and sustainable platform through research-backed systems and a proof-of-stake (PoS) protocol. Today, the platform continues to lead the way in digital identity solutions, with their ongoing progress reflecting a strong belief in effective security and decentralized community governance that goes beyond DeFi.
Implications of Centralization
Current systems allow large corporations such as Google and Meta to collect endless amounts of user data, from documents to payment information to photos and media. They can then utilize and profit from this user-generated data, virtually unrestricted in both quantity and form, raising significant ethical questions in the field of data economics. In addition, this type of centralized record keeping is susceptible to single points of failure, or the risk of losing mass amounts of user data stored on a single server during a compromise or technological failure.
Descriptive & BRIEF Technical Overview of Cardano’s Digital Identity Solution (Atala PRISM) and Processes
By definition, the decentralization of digital identity systems aims to distribute power away from these central sources, which is mirrored in Cardano’s self-sovereign identity (SSI) approach. Users own and manage their data and can securely self-verify their identity using cryptographic Decentralized Identifiers (DIDs), which function across platforms and without third party access. Coupled with their blockchain technology– a decentralized, digital form of transparent, verifiable, and unalterable record keeping– users gain both superior control and security over their personal data. Through the dispersion of data across nodes (computer systems in the Cardano network), blockchain technology is able to address and eliminate the risk of single points of failure.
Atala PRISM (PRISM) is Cardano’s digital identity solution, built and run by a diverse team of scientists and engineers on the Cardano blockchain platform. Their extensive peer-reviewed research and scientific processes are all publicly available, providing users with a necessary sense of transparency. PRISM combines blockchain technology with self-sovereign identity to provide users with both control and security over personal data, much like keeping a blockchain-backed folder of personal documents.
It provides use cases for education, retail, agriculture, governance, finance, and healthcare, using the SSI approach and DIDs to apply secure verification and traceability systems to each sector.
Decentralized Identifiers (DIDs) and Verification
DIDs use internal verification methods, or a set of specific parameters that are used together with processes to verify a proof. In Cardano’s case, the DIDs use the Edwards-Curve Digital Signature Algorithm (EdDSA) on PRISM to run digital signatures, which verify identity through matching a Public and Private key pair through the EdDSA processes. EdDSA functions to verify signatures quickly and with strong resistance to cryptographic attacks, making it a particularly secure and high performing algorithm. Additionally, the mathematical nature of the processes allow for full transparency, generating trust by allowing users to see how they function.
Relevance
In April 2024, the hacker group USDoD stole and leaked approximately 2.7 billion personal records of information from the National Public Data (NPD) company, including full names, birthdates, addresses, phone numbers, and social security numbers. With no national privacy laws regarding the data collection of individuals in the U.S., aid in the aftermath consisted of the advice for users to “use reputable companies” and “ a password manager,” to protect financial assets and personal data. Clearly, however, it will be difficult to remedy and prevent instances such as these without restructuring the current systems and services we use to house, access, and safeguard our information.
The economic impacts of our current digital identity solutions are undoubtedly evident; from lack of data ownership to incompatible personal accounts to cyber-attacks, the centralized approach remains fragmented and inefficient.
Addressing Fraud & Identity Theft
In 2021, the U.S. alone had over $212 billion dollars of identity-related fraud reports with approximately $16.4 billion lost, affecting a total of 23.9 million U.S. citizens. In the same year, credit card fraud cases caused United States citizens an average of $620 per case.
Cardano uses PRISM’s DIDs to address fraud and identity theft through the self-verification ability of their digital signatures, and the individual management of data and records including bank information, credentials, and legal documents. With the EdDSA algorithm of the DIDs and users’ ability to send their personal information only to whom and where they wish, the risks of data breaches, thefts, and leaks are significantly minimized.
Ownership of Academic and Professional Records
Cardano’s education solutions are based on the decentralization of record systems, including academic certifications like diplomas, degrees, and resumes.
Their PRISM system, through SSI, gives individuals full ownership of these records, removing intermediaries and, as a result, the inefficiencies associated with storage, cost, and time. Rather than paying (often costly amounts) a university or institution for a replacement diploma and waiting (often prolonged periods) for its re-delivery, individuals have constant, immediate access to their records with no risk of damage or loss.
By eliminating the inefficiencies of cost and time, inequity across socioeconomic groups can be legitimately addressed. As the average college application fee in the United States sits at $78, 70% of Common Application students came from ZIP codes above the median household income level (Common App). By removing these costs, Cardano can mitigate such disparities in educational opportunities.
Healthcare Transparency
According to the World Health Organization, over 50% of medications sold online globally are “substandard or falsified, (SF),” defined as “deliberately and fraudulently mislabelled with respect to identity and/or source,” and are more prevalent in lower income communities with less access to sufficient medical care and fewer pharmaceutical regulations (NLM, 2008). In addition to the significant health risk this entails, these products contribute to $75 billion in global losses annually– a direct result of the expenses and lost revenue associated with SF instances (NABP).
Due to a lack of publicly accessible traceability, it can be nearly impossible to verify medications, particularly from online, and especially in lower socioeconomic communities, perpetuating supply chain inefficiencies and widespread mistrust.
With Cardano’s solutions, users can not only manage healthcare records and data, but use DIDs to verify the legitimacy of medications. Through a supply-chain-focused branch of Cardano’s decentralized solutions, medications can be traced back to their origins, ensuring consumers are receiving authentic products. Through their transparent and secure systems, global healthcare revenue loss can be minimized and more inclusive access to effective treatment can be achieved.
Potential Hurdles
Given the current political climate, Cardano will surely face both regulatory and economic hurdles as it aims to implement new systems. To address this, Cardano has designed an “adaptive” protocol alongside a governance system called Voltaire. Their framework was built to be flexible and adaptable, and includes protocols and parameters that are not impermanent and can be changed over time, ensuring scalability can be achieved. The Voltaire governance system goes hand-in-hand, and; through its decentralized governance design, Cardano users are able to vote and implement the changes they want to see in the platform, ensuring functionality and goals continue to grow and align with the ever-changing needs of the public, laws, and regulations.
Cardano’s ability to change as necessary gives them more leeway than other similar blockchain platforms when it comes to managing the changing political and regulatory climate. Although the company is vocal about pursuing political change and individual freedoms around the world, they understand that these changes do not occur overnight. Thus, the platform stresses collaboration and cooperation with regulators and institutions, including the International Finance Corporation, The World Economic Forum, The Foreign Commonwealth and Development Office, and the European Bank. Cardano is publicly open to integrating blockchain into existing systems rather than fighting to replace them— eliminating an “all-or-nothing” approach to change and making their adoption more feasible.
Potential Impact & Conclusion
In today’s extremely digital world, our user-generated data is more valuable than ever. Through Cardano’s Decentralized Digital Identity solutions, we can seek solutions to the societal inequities and economic inefficiencies associated with centralized systems, holding our institutions accountable and taking true ownership over our data.
Works cited
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