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Digital sovereign identity in Web3

Since Web 3.0 is all about decentralization and data privacy, digital identity, and notably self-sovereign identity (SSI), is crucial for its implementation. If reckless information sharing and its unchecked exploitation for commercial gain characterized Web 2.0, Web 3.0 reverses that paradigm to empower data owners to be in control of their data. The latter is made feasible by SSI, a technique of identification that centers information control around the individual, eliminating the need to completely store personal data on a centralized database.
Key Points

Web 2.0 vs. Web 3.0 Definition

Web 3.0 is a third installment of the internet, as implied by its name. Web 3.0 may be seen as a shining knight in comparison to the status of the internet today. Web 2.0 was/is the web of interacting and sharing through an explosion of social media apps, which led to a small number of tech titans essentially owning the whole data space. Both those IT behemoths and other parties have heavily abused the latter.

 The main differences between Web 3.0 and its earlier versions include decentralization (peer-to-peer contact without the need for a central authority), transparency, ownership, and management of data, improved security, and the usage of blockchain as its primary technology. Blockchain technology, on which Web 3.0 is based, makes it impossible to alter any records.

Microsoft, Intel, and NVIDIA Corporation have all started making investments in the Web 3.0 field, even though it is presently being created by startups and a variety of non-profit organizations. What else does Web 3.0 actually mean? What kinds of modifications may users anticipate? The identity space is where the most fascinating developments occur.

Web 3.0's Identity

Identity is essential to make Web 3.0 a reality, since full decentralization plus data protection are two concepts that define it.

Privacy, security, transparency, and compatibility are at the forefront of Web 3.0. So, it must be developed using open standards -ideally with self-sovereign identity (SSI)- and also verified credentials. Data breaches and hacks have highlighted the fragility of individual data, highlighting the importance of SSI as well as digital identity, while an increased focus on the windfall profits that giants of social media make from commercializing such data has aided in raising public awareness of the value of their own personal information.

Web 3.0's Self-sovereign Identity

The best method of digital identification for Web 3.0 is probably self-sovereign identity (SSI). A technique of identification known as SSI centers information control around the user. Fully compliant with Web 3.0, SSI allows people more flexibility over what info they share while protecting their privacy and eliminates the need to keep personal information in its entirety on a single database. It's a user-centric and user-controlled method for exchanging information that has been authenticated and digitally signed, contributing to security. 

Integrating data parts for a cohesive and accessible Web 3.0 will require this degree of verifiable, decentralized trust.

Identity in the Metaverse: Distributed Administration

How will we be perceived in the metaverse? Although a decentralized Web3 would imply that it would be entirely within our control, the quantity of data being kept online is expanding, suggesting otherwise. The terms "The Metaverse" and "Web3" are now popular, with their ideas spreading to the blockchain, fintech, and now even major news industries. Decentralization is regarded to be at the heart of the Web3 Metaverse, and what's fuelling its expansion is the possibility of a more positive user experience, safety, and control for consumers.

However, the fact that the metaverse is built around user identities and there is an unprecedented quantity of data online raises questions about data security, privacy, and interoperability. This might slow down the growth of the metaverse, but both controlled and self-sovereign identities can be crucial to making sure that we actually control our identity and data in this new environment.

For people and companies from different industries and with different requirements, the metaverse offers a limitless number of options. One of the largest modifications, according to recent reports, will be included, allowing everyone with an internet connection to make use of its advantages. This encompasses the 1 billion unbanked individuals in the globe being able to finally use the virtual world to participate in the global economy. This digital ecosystem will be centered on virtual identities, which will include anything from the capability to automatically make restaurant reservations online to a digital avatar that can be customized via augmented reality. New forms of expression will be made possible for individuals of all genders, ages and backgrounds, and new online relationships and communities will be formed as a result. Some claim that this is because it is perceived to be a more secure environment than the actual world for anybody to flourish in. 

Nevertheless, with much more data now than before being kept online, worries about privacy and trust have increased. Thoughtful IT firms, however, are in front of the curve. Some of them have begun to create game-changing solutions to guarantee the decentralized control and security of users' information after realizing the potential problem with control and privacy. They think self-sovereign identities (SSI) are the magic solution to the trust problem in the metaverse and that it has to be created using an open standard. SSIs are decentralized digital identities that are centered on valid and verifiable credentials coupled with physical verification information, such as biometrics. Users may self-manage unique digital identities by employing blockchain solutions and minimal proofs, which eliminates the need for external parties to securely store and maintain user data. Most crucially, this data is kept indefinitely in a non-custodial wallet that the user controls and may access momentarily within the virtual worlds at their discretion. The way data is held and controlled by a user is expected to alter fundamentally as a result of this verified data, providing them with access to it and authority on their possessions by virtue of just being themselves.

The Existence of Corporate Digital Identity

Globally speaking, the maturity of corporate digital identity varies greatly between nations. Significantly advanced nations like Singapore, the United Arab Emirates (UAE), New Zealand, and Estonia began by creating a framework for digital identification for individuals before including companies. It is interesting to note that, in comparison to larger nations, the countries leading these advancements are typically smaller and free of legacy infrastructure.

With its system allowing businesses to establish residence without a physical presence, Estonia boasts possibly the most sophisticated corporate identification system in the whole world. Tax payments can also be added to the list of examples of things that can be made in an automatic and transparent manner. Private sector businesses in Estonia have taken advantage of corporate digital identification, allowing for the quick payment of insurance claims and the provision of approvals for financial products, among other things.

The development of network confidence and trust is essential for these cases. In this matter, government engagement is crucial. For instance, most people are okay with the notion of governments developing and protecting what is regarded as "foundational" individuality as a component of a nationwide identity program.

Usually, a "functional" or "industry-based" identity is developed on top of this fundamental identity (either by public or private institutions). For instance, in the medical field, practitioners are identified as consultants with a certain specialization by a registration number. The term "transactional" refers to the third category of identities that may be used to support business or other transactions. An overseas bank account details are one illustration from the banking industry.

While private-sector activities can assist to maintain standards and interoperability, governments are vital for establishing basic digital identities for corporations. With its 20-character alpha-numeric code Legal Entity Identification (based on an ISO standard), the Global Legal Entity Identifier Foundation, founded in 2014, ensures that a counterparty is always recognized in monetary operations in the same way. This foundation offers services involved and accessible, accurate information for unique legal entity proof of identity worldwide.

Corporate digital identity provides a platform for firms to address enduring issues. Exporters, importers, banks working on behalf of each side, customs, freight forwarders, shippers, and insurance are just a few of the many participants in the intricate world of international commerce. In order to promote efficient access to financing through the issuing of credit letters or even other instruments, as well as to protect the security of commerce, establishing identities along this chain is essential.

Another use case illustrates a more modern trend: businesses are increasingly operating around the clock and internationally. Multinational corporations have historically had local businesses and bank balances for paying suppliers and collecting from consumers. Due to technological advancements, several top Fortune 500 businesses now run asset-light business models with little to no physical presence. They must still do cross-border business, though. Somebody has to be able to prove their identification in order to accomplish this.

Conclusion

Web 3.0 won't appear suddenly, of course, but the groundwork has been done, and the path is rather obvious. This transformation is already taking place as a result of the widespread usage of blockchain technology and its interoperability, the acceptance of identification solutions like SSI, and other factors. Is a decentralized world just a question of time until we awaken to it? Rather Labs can help businesses to create a digital identity and keep their data safe for the long term without letting the external force hamper the data. 

Macarena López Morillo
Head of People
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