Blockchain Authentication: Security for Digital Identities

Mike Engle

Using distributed identity management for your business should be a no-brainer, especially if you’re worried about security for your employees’ logins.

But what is blockchain authentication? Blockchain authentication is a process that verifies a user with distributed ledger technology and digital identity verification to protect the passwords and data that make up a user’s digital identity.

What Are the Challenges of Managing Digital Identities?

From executives to end users, many of us still tend to take authentication and digital identity for granted. We have usernames and passwords, we log in to our accounts and work systems, and there aren’t any issues in most cases. And, if there are problems, they are usually an inability to log in due to forgotten passwords or a broken two-factor authentication mechanism.

However, the practice of managing identities is a discipline on its own, and it is at the heart of any Identification Management (IdM) or Identity and Access Management (IAM) system. Without creating, protecting, and determining identity integrity in a digital system, there is no way to guarantee proper security or authentication. These problems tend to scale with the data size, so the more identities stored in a system, the more pronounced vulnerabilities and issues become.

With that in mind, experts have identified several challenges for managing digital identities. These challenges include the following:

  • Access Management: With more identities comes more sets of authentication credentials. Passwords, PINs, biometric templates—these credentials become a priority for the system and administrators, becoming more challenging as more identities are created.
  • Compliance and Security: As an identity management system becomes more complex, there are more potential attack surfaces that hackers can exploit to steal information and undermine system security. This fact is especially true for common password systems where a database breach can compromise millions of online IDs.
  • Integrity: For much of this conversation, we’ve focused on digital identity as a user account. However, countries, like India, are beginning to turn to digital identity as a primary form of identification on par with government ID. For digital identity to function in any meaningful way, there must be guarantees that individuals using digital IDs are who they say they are (through identity proofing), that the ID hasn’t been stolen or compromised, and that there aren’t identical copies of the same ID in the system.

Security, management, and integrity are all overlapping challenges for ID management systems that purport to do more than allow users access to local systems or workstations. While still in use to manage IDs, traditional technologies like databases are quickly being exposed as an incomplete solution to these problems. That is why security, identity, and engineering experts have turned to a relatively new technology operating in an unlikely industry: cryptocurrency and the blockchain.

What Does Blockchain Technology Do to Help Manage Digital Identity?

Blockchain technology (or simply “the blockchain” when referring to a specific application or instance) was born from the mind of Bitcoin creator Satoshi Nakamoto (a pseudonym for an unknown developer or developers). Outlined in the whitepaper that laid out the concept of Bitcoin, the blockchain serves as a public ledger from which any user of a system can verify the integrity of all transactions in that system.

Researchers and engineers in other fields quickly realized that the blockchain concept had incredible applications outside of cryptocurrency. Therefore, many of them built new forms of distributed ledgers that took the concept from Blockchain while addressing limitations and adding features critical for security and access or authentication applications.

Following that new development, researchers and engineers actually built several types of blockchains as ledgers:

  • Public: Public blockchains are those that are, appropriately, open to public use. There is no centralized governing organization, and users can join the ledger as pseudo-anonymous nodes as they wish. This kind of arrangement supports certain kinds of public transactions but has significant limits for more security-focused applications. The Bitcoin blockchain is a form of public ledger.
  • Private (Managed): This type of blockchain is permissioned and managed by a single organization with a central authority. It still decentralizes critical features like data management or access, but it doesn’t allow public access and decentralization like a public blockchain (the Bitcoin model) does. This provides additional layers of security and control that makes this kind of ledger suitable for security and access applications.
  • Consortium: Like a private blockchain, a consortium blockchain creates a permissioned  ledger controlled by a central governing authority. However, instead of a single organization, a consortium ledger is operated by a group of organizations. These ledgers can support more decentralized functions while maintaining the benefits of a private blockchain, and it helps organizations without the infrastructure necessary to implement a blockchain to do so as part of the consortium.
  • Hybrid: Combines aspects of private blockchains (controlled by an organization) with public aspects (selective public control over access rights). This format introduces some specific transaction validations only achievable in public ledgers while maintaining a private infrastructure.

Blockchain authentication uses the distributed ledger technology of a blockchain alongside identity verification methods to strengthen the privacy and security of authentication systems. The blockchain addresses the challenges mentioned above in several innovative ways:

  • Security: Blockchain ledgers can be encrypted like any other data, protecting user credentials as safely as any other system. However, a blockchain provides several advantages due to its decentralized architecture. There are no central areas of attack or “honey pots” involved with a distributed ledger, which means a database breach is no longer a massive threat to identity systems.
  • Self-Sovereign Identities: Because identity on blockchain ledgers is decentralized, it gives end users much more control over their digital identity. For example, a system can distribute identity management across a system of applications on mobile phones. No central providers would control the IDs, which leaves users  free to control those identities as they see fit. This approach has huge implications for data ownership and governance for consumers and businesses alike.
  • Passwordless Authentication: Blockchain ledgers can store all data types, including tokens, biometrics, scanned and verified documents, and encryption keys. Any combination of these can serve as strong forms of authentication, and any combination can be automatically presented during an authentication request without the need of a user to provide a password.
  • Incorruptibility: The core tenant of blockchain technology is that all events are “public.” In the case of digital identity (and unlike cryptocurrency), “public” means explicitly available for review by system applications. That means that identity integrity is apparent, and the records of identity management (including creation, deletion, and change) are part of the ledger. Secure blockchain authentication ledgers provide immutable records for identity management and forensic purposes.

Distributed, Secure Blockchain Authentication with 1Kosmos BlockID

Blockchain technology and distributed authentication is poised to take digital identity management and verification into its next stage of evolution. The truth is that while massive advances have been made in the realm of database security, identity management and distribution, biometric authentication, and so on, these approaches are still locked in an old model of identity authentication.

The future is in passwordless authentication that uses a combination of strong biometrics, private and secure blockchain ledgers, and identity proofing to ensure that the security, privacy, and integrity of digital identity remain intact. 1Kosmos provides critical features to support these efforts, including:

  • Private Blockchain: 1Kosmos protects personally identifiable information (PII) in a private blockchain and encrypts digital identities in secure enclaves only accessible through advanced biometric verification. Our ledger is immutable, secure, and private, so there are no databases to breach or honey pots for hackers to target.
  • Identity Proofing: BlockID includes Identity Assurance Level 2 (NIST 800-63A IAL2), detects fraudulent or duplicate identities, and establishes or reestablishes credential verification.
  • Streamlined User Experience: The distributed ledger makes it easier for users to onboard digital IDs. It’s as simple as installing the app, providing biometric information and any required identity proofing documents, and entering any information required under ID creation. The blockchain allows these users more control over their digital identity while making authentication much easier.
  • Identity-Based Authentication Orchestration: We push biometrics and authentication into a new “who you are” paradigm. BlockID uses biometrics to identify individuals, not devices, through identity credential triangulation and validation.
  • Integration with Secure MFA: BlockID and its distributed ledger readily integrate with a standard-based API to operating systems, applications, and MFA infrastructure at AAL2. BlockID is also FIDO2 certified, protecting against attacks that attempt to circumvent multi-factor authentication.
  • Cloud-Native Architecture: Flexible and scalable cloud architecture makes it simple to build applications using our standard API, including private blockchains.

If you are interested in learning more about how BlockID distributed ledger technology is powering the future of blockchain authentication, watch our webinar on Decentralized Identity: Bedrock Business Utility. Also, make sure you stay informed on 1Kosmos news and updates by signing up for our email newsletter.

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Meet the Author

Mike Engle

Co-Founder and CSO

Mike is a proven information technology executive, company builder, and entrepreneur. He is an expert in information security, business development, authentication, biometric authentication, and product design/development. His career includes the head of information security at Lehman Brothers and co-founder of Bastille Networks.