In an increasingly digitized world, the lines between the virtual and real world are becoming increasingly blurred. With the enhanced role played by digital technology in our daily lives, the functions of our digital identities continue to grow. From banking transactions and online shopping to social media and instant messaging, the average internet user inevitably shares a lot of personal information with digital service providers. It’s unfortunate, then, that the need for multiple digital identities to access all the various platforms can leave internet users vulnerable to identity theft. The risk of identity theft is 46% higher for social media users compared to internet users who are not on social media.
The scale of these dangers was reflected in Facebook’s massive data breach disclosed by the company in September 2018, which compromised the personal data of more than 29 million users. In July this year, the United States’ Federal Trade Commission (FTC) imposed a US$5 billion fine on Facebook for its culpability in the security breach, but many investors saw this as merely the cost of doing business, equivalent to about a month’s revenue. The entire episode communicated two things: even the biggest social media platforms are not safe, and when they are held to account, it’s a slap on the wrist.
In the context of Southeast Asia (SEA), a report entitled “Fraud Rising: How Bots and Malware Are Compromising APAC’s Apps in 2019” issued by mobile marketing analytics firm AppsFlyer noted that the rise of e-commerce in the region leaves internet users in SEA countries vulnerable to online fraud, due mainly to the susceptibility of e-commerce companies to such fraud. According to the report, the region stands to lose up to US$260 million to fraudulent activities involving e-commerce transactions, with Indonesia, Thailand, and Vietnam expected to bear the brunt of the losses.
Moreover, the “2018 CyberSource Online Fraud Benchmark in Southeast Asia” report noted that identity theft is one of the most common types of e-commerce-related fraud in the region. As we grow increasingly dependent on our digital identities, let’s explore how blockchain might be used to restore trust and security in the virtual world.
From the outset, the fact that digital service providers operate in silos and store their users’ personal data in their own centralized databases substantially increases the risks of users falling victim to identity theft. Centralized databases are easy targets for hackers, and the lack of interoperability between such databases forces internet users to submit their personal data multiple times, exposing them to the risks of phishing activities.
On the other hand, the use of blockchain-based Decentralized Identifiers (DID), which in addition to being decentralized as the name suggests are also interoperable, would significantly reduce the risks of personal data leakages and identity theft. Even when identity theft has occurred, the technology features of blockchain, which have been leveraged to prevent double-spending of Bitcoin, may also prove to be useful in mitigating any particular instance of identity theft by preventing multiple people from using the same digital identity. Accordingly, the theft of any digital identity stored on blockchain networks can be detected once the thief attempts to use the stolen identity. the true owner can then take the necessary actions to prevent any losses.
Other than identity theft, there are also the risks of personal data tampering, which blockchain may be able to mitigate. The use of cryptographic hash functions by blockchain-based storage networks ensure that any tampering with personal data stored in such networks would be immediately evident due to the Avalanche effect, which renders any change in the data input, however small, to have a drastic effect on the resulting output. This functions as an obvious red flag, raising the alarm that the integrity of personal data has been compromised.
As the use of digital technology increasingly crosses the boundaries of online and offline through the advent of tools based on Artificial Intelligence (AI) and the Internet of Things (IoT), it’s possible to imagine a future where digital identities are as integral to us as any limb or organ. Accordingly, it is imperative that we explore the use of blockchain to secure our digital identities, before the stakes of data theft or data tampering become too great to bear.
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