Microsoft's Decentralized Identity & Blockchain Praise

Microsoft has seen one strong use case of blockchain technology, and that would be the creation of a system of digital identities that follow the trend of mingling the real world and the world of online services.

"Over the last 12 months we’ve invested in incubating a set of ideas for using Blockchain (and other distributed ledger technologies) to create new types of digital identities, identities designed from the ground up to enhance personal privacy, security and control," wrote Alex Simons, Director of Program Management at the Microsoft Identity Division.

"Each of us needs a digital identity we own, one which securely and privately stores all elements of our digital identity.  This self-owned identity must be easy to use and give us complete control over how our identity data is accessed and used," wrote Ankur Patel from Microsoft's Identity Division.

At the moment, identity systems handle the consumer data directly, and include matters of access and verification. But a self-owned, encrypted identity would mean that all apps would end up communicating with only the protected customer data. Mr. Patel believes some of the existing blockchains may be a part of this infrastructure:

"Some public blockchains (Bitcoin [BTC], Ethereum, Litecoin, to name a select few) provide a solid foundation for rooting DIDs, recording DPKI operations, and anchoring attestations."

Charlie Lee, creator of Litecoin, seemed happy about the mention:

"Microsoft looking into building decentralized IDs on blockchains. Nice shout out of Litecoin! 🚀" Microsoft points to Bitcoin, Ethereum, and Litecoin as three specific platforms that are suitable foundations for DIDs. (https://t.co/nK2Qh2Yw3x)

The Microsoft expert also looked at the state of public blockchains, and found that some projects were becoming less decentralized.

"While some blockchain communities have increased on-chain transaction capacity (e.g. blocksize increases), this approach generally degrades the decentralized state of the network and cannot reach the millions of transactions per second the system would generate at world-scale. To overcome these technical barriers, we are collaborating on decentralized Layer 2 protocols that run atop these public blockchains to achieve global scale, while preserving the attributes of a world class DID system."

Currently, the biggest problem with adopting an encrypted identity is the lack of recovery mechanisms. Microsoft will think of ways of making the encrypted identity fool-proof and with a mechanism for rolling back mistakes.