What Is a Digital Identity? [Importance of Digital IDs]

Javed Shah

Your digital identity, including potential work logins, can be exposed to hackers and sold to the highest bidder, so what can you do to protect it?

What Is a Digital Identity?

A digital identity is any online data that connects to an individual or entity, like banking information, social media posts, login information, and more. This information is valuable to hackers and can be breached if not handled securely.

Traditionally, our identification is something we present as proof that we are who we say we are, whether during financial transactions, legal actions, or commercial processes.

However, when it comes to “digital” identity, we most often find the term used in online and cloud contexts. For example, you have a digital identity that interacts on social media, shops at different online storefronts, and sends emails.

Both definitions of identity include one key practice: using credentials to identify ourselves to access rights, privileges, and resources. This is just as true for traditional forms of identity as it is for digital identity.

Therefore, it’s critical to understand identity as a collection of information, aspects, permissions, and credentials representing you as an actor in a particular space. As a user of a social media platform, for example, you would have an identity that includes:

  •  your personal information (as much as is needed for using said platform)
  • a set of authentication credentials (usernames, passwords, biometric information, etc.) 
  •  any additional information related to your behavior on that site (such as user permissions, subscriptions, connections, etc.).

Breaking Down Digital Identities

We can break down digital identities into two primary components:

  • Attributes: Attributes include information that relates to a representation of you in the system. Attributes often include personally identifiable information (PII), like an ID number, payment information, PINs, or other login credentials. In enterprise settings, attributes can also include information about your role in a company (including permissions, titles, or pay rates).
  • Activities: Activities are a record of what you as a user do through your identity. In more consumer or public spaces, this can be as simple as recording comments, posts, or photographs posted online. In government or enterprise settings, these can include details like signed documents, search queries, or legal history.

As we continue to expand into an increasingly cloud-focused world, identity as a medium of identity authentication carries increased weight in terms of privacy and security. Likewise, streamlining and, in many cases, centralizing functions to work across different platforms also becomes more attractive for users and more secure for administrators.

Following the effect of streamlining, strengthening, and expanding the role of authentication in modern society, the practice of management has become a discipline in its own right.

Challenges, Risks, and Concerns Around Digital Identity

If you have already begun to think about some questions and concerns around digital identity, you aren’t alone. As we move into a world where identities are more important to our everyday lives, it stands to reason that we have to think about some of the challenges that we face in using and implementing them.

Business operators and enterprise leaders face several significant questions around managing digital identities, particularly if they provide services in critical industries, like power infrastructure, healthcare, or government contracting, where they may come into contact with protected data.

Risks of Digital Identities

With that in mind, there are several risks and concerns that we face when moving towards more comprehensive digital identities:

  • Security and Privacy: Perhaps the most profound questions around identity relate to security. If you operate a business with any infrastructure, you necessarily rely on identification and authentication services to protect your systems and the identifying information of your customers and your employees.

Security challenges are only exacerbated by the many providers or systems still using older forms of management (like relational databases) that serve as honeypots for potential cyberattacks.

  • Compliance: Many forms of digital identification also include some form of secure or private data. A user in a healthcare portal, for example, will have a corresponding ID that invariably includes information protected under HIPAA. In many cases, user verification becomes a location where multiple security and compliance concerns converge.
  • Ownership and Ethics: Modern data collection, particularly in the United States, hasn’t necessarily emphasized user ownership of digital identities. Companies can collect and sell identity data and obfuscate some or all of the ways they store and use that data (outside of compliance requirements).

    The question of ownership and the ethical management and use of digital identities is a controversial question today. Modern compliance frameworks like GDPR and CCPA are attempting to reverse that trend. Still, many identity management tools or platforms operate under the assumption that an organization will store and manage digital identities rather than users.

  • Fraud: Proving that a user is who they say they are is still difficult without additional security. For example, most identification management systems don’t operate with any proofing protection. As such, a hacker with credentials can use an identity as if it were their own.

    This is a major problem in our modern network systems where all our devices, from phones and computers to devices on the Internet of Things (IoT) all offer potential vulnerabilities to hacking.

The Global Impact of Digital Identity

These challenges are ever present, and modern ID management solutions must contend with them in one way or another. Digital identity is becoming more prevalent outside of simple user accounts. Consider the following trends in the use of identity:

  • Modern smartphones have made using digital forms of payment much easier, even without a physical card present. There is a push in the U.K. and the United States to expand this technology, using National Institute of Standards and Technology (NIST) guidelines and existing mobile networks, to forms of identification like driver’s licenses.
  • A major point of discussion during the ID2020 summit in New York the U.N. started to seriously consider the potential for blockchain technology and cryptography to support universal forms of digital identification.
  • Several countries have launched fully functioning or trial runs of national eID programs. These countries include Italy, Poland, Japan, and Thailand.
  • Germany currently circulates electronic versions of ID cards for its citizens. While these don’t replace physical IDs, they supplement them and provide more ways to use them in a modern digital society.
  • Canada is currently preparing a digital ID scheme called the Pan-Canadian Trust Framework to provide national digital IDs and unified logins.


While digital identification is becoming the norm rather than the exception, it isn’t the case that any authentication and ID management solutions are meeting the challenges listed above. 

Widespread adoption of digital identities that can support multiple platforms, contexts, and industries will call on more robust authentication technology than many people are using today. The solution calls for a combination of advanced biometrics, decentralized identity management, and compliant identity proofing.

1Kosmos BlockID provides all of these features. Our mission is to bring advanced multi-factor authentication together with physical identity proofing on a cloud-driven solution that streamlines authentication, strengthens security measures, and brings ID ownership back to users.

We accomplish this through a series of critical features, including the following:

  • Private Blockchain: 1Kosmos protects personally identifiable information (PII) in a private blockchain for a decentralized identity management approach and encrypts 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 honeypots 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.
  • 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.
  • 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 users more control over their ID while making authentication more straightforward.

If you’re ready to learn more about modern digital ID management and authentication, make sure you watch our Decentralized Identity: Bedrock Business Utility Webinar. Also, don’t forget to sign up for our email newsletter to receive news on new webinars, product updates, and events.

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Meet the Author

Javed Shah

Former Senior Vice President Of Product Management

Javed has spent his entire twenty year career designing and building blockchain and identity management solutions. He has led large customer facing pre-sales teams, led product management for identity management platforms like the ForgeRock Identity Platform and the ForgeRock Identity Cloud. Javed has an MBA from UC Berkeley.