Toward a New Era of Digital Freedom with Web3 Identity

May 9, 2024

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Do you own your identity? Your name is yours, but what about the other identities that have been assigned to you: the account identifiers and digital breadcrumbs you leave behind as you live your life online? All this data is created, controlled and stored by others – for their gain, not yours. It’s not data you control. There was an old saying about free online services: “If you’re not paying for the product, you are the product.”

The truth is even more disturbing: You are the product, regardless. Always. Your digital personhood is for sale.

We are digital beings. Each of us is a walking, talking identifier linked to a mass of data that others own. Our identities are commodified, traded and exploited. Everything we create and consume online is fodder for data-hungry corporations’ profit-seeking business plans and algorithms. And in the AI era, it’s worse: Businesses have become insatiable consumers of any and all personal data, which they use in an arms race to know their consumers better than their competitors. This data is used by businesses to extract value from consumers more efficiently, through better personal targeting of messages, offers and products.

It’s data that the consumer never sees.

The time to realize our personhood as digital beings has never been more urgent.

You Are Your Identity – But Who Owns It?

If you’re like most consumers, you’re unaware of how your data is being used and it’s not your fault. It’s by design. The businesses collecting this data don’t have any incentive to be transparent with how they collect and exploit your digital identity. Having unique user data is a competitive asset to most businesses, it’s not something to be shared – either with the consumer or the industry.

Privacy controls, when they are in place, are non-standard between products, and often buried. The legalese varies, and where you live affects the disclosures you see and your options for opting out. There is no universal legislation that gives you ownership and/or control of your digital identity.

If there’s a corner of your identity that you prefer to keep to yourself, good luck. The shows you watch, the short-form content you scroll through – it is all being logged so that algorithms can serve you more of the content that platforms predict will increase your engagement. Your identity is being used to sell you information, content and products, and it couldn’t be less clear how.

Once online products, apps, publishers, and operating systems have collected your data, the pieces of your digital identity and habits (anonymized, they say) are often sold further to other businesses, including political organizations.

Let’s be clear: this happens to every group with buying or voting power. Your online actions and your mobile device usage spew information to parties who have authorization to collect it thanks to a complex system of terms-of-service agreements and privacy policies that act as legal shielding.  Targeted (“personalized”) ads follow you from platform to platform.

It’s not like you can just quit, either. The use of many of these systems is often critical for individual social and financial success. It’s a new and odd form of indentured servitude — to the corporations that have created the terms for these platforms, where you can never pay off the debt and never leave. Just ask users of Facebook, X, and more who come back day after day, even with the knowledge of exploitation.

As content sites and services monitor your actions (and reactions) and experiment on you in real-time, their triggers to get you to engage get better and better. Social sites in particular can become extraordinarily personal and effective propaganda machines, customized just for you. You can be manipulated and exploited.  Your identity – the hopes, fears, and likes that make you, you – are the property of a company you might not even know exists. (Read Facebook and Cambridge Analytica: What You Need to Know as Fallout Widens)

How “Web 2.0” Destroyed Privacy

This tracking of identifying information is made possible by the fundamental architecture of the internet as it’s known today, “Web 2.0.”

It’s interactive, dynamic and alive, and it’s easy to think that its two-way nature works for you. Often, it does. You can tell the world how you feel on a social network, buy goods on a commerce site, create and sell artwork on a marketplace, and do a lot of the work that pays your expenses online, via your computer or smartphone. It’s more freedom and convenience than the world has ever seen. It’s a real benefit.

It’s also a trap.

The communications that make up the transactions must be processed and stored somewhere, and, to a large extent, that somewhere is in huge data centers controlled by a shrinking number of gigantic corporations. As these corporations get more profitable and powerful – by leveraging the data they collect about you – they tend to buy or out-compete smaller competitors, until they have ultimate and nearly unchecked control over what you see and how you transact. They do this even when there are laws that prohibit such actions. Sadly, many of these laws are not enforced.

Not only is this data about you not yours, it’s also hidden. It represents a piece of a hugely important trade asset to a corporation – a secret recipe. It’s precisely the kind of thing companies will not share unless forced to do so. Public pressure and some data privacy laws have led many companies to create methods for consumers to download their records. However, these options are often difficult to find, and the data, if downloaded, can be very hard to interpret.

On the internet today, almost every company that you do business with knows who you are. Their private identification of you is usually connected to some other identifier that spans businesses and databases – such as your email address, browser identifiers (“cookies”), name, credit card number, or another “standard” identity. Some of this correlation is necessary – they need to know that you can pay for what you’re buying, for example, or that you’re not underage when accessing sensitive content. But most of the correlation is simply used for profiling and targeting that is far beyond your control or desire.

There is Hope

There is a possible future where you are not a product.

There’s a way to keep your data about you under your control – and yet still give businesses enough of the information they need to provide you with customized products and services that you want.

It’s called Web3 Identity (or Web3 ID).  Rooted in blockchain technology, a Web3 ID empowers individuals to own the data of their digital selves. It allows us to take all the platitudes we hear about data privacy as a right and actually make them real.

Web3 ID is a different kind of identifier you use to tell companies who you are. It is one you own, that cannot be correlated to other IDs without your consent. Web3 ID can be leveraged to allow important information (like your financial responsibility) to be guaranteed by companies (like banks) that are in the business of generating that information – but other companies will only get the verification that such data is accurate, and no more. Web3 ID can be revoked piece by piece if you want and when you need. It contains information about you that you want to share, and that allows you to modify that information and control who gets to see it.

With a Web3 ID, individuals hold the keys to their digital selves. No longer will we be at the mercy of non-transparent algorithms and profit-driven entities.  Instead, we become the architects of our online personas, safeguarding our privacy and autonomy in the digital realm.

Who Owns this Data?

Our initiative at Blockchains is to build technology around Web3 ID for the benefit of the individual – to help you take back your data, and the Internet with it. We are using blockchain technology for this because it holds the most promise for the future.

A public blockchain is a distributed database, so no single entity can control it or turn it off. A major feature of a blockchain is the immutable ledger, which means that data put on a blockchain remains secure and tamper-proof. Using blockchain networks instead of corporate-owned databases gives us a future where trust is not a commodity traded by corporations, but a cornerstone of online interactions. Through code contracts, known colloquially as smart contracts, and attestations that empower data providers to securely vouch for data accuracy, individuals can transact with confidence, knowing that their privacy remains under their control and can be updated when they need to do so.

Paradoxically, this kind of personal data sharing should be better for business than the current, wide-open, vacuum-it-all-up data collection methodology of today. Because it’s based on trust. Businesses must earn the trust of consumers before they can share data, and consumers must spend a little effort to ensure they have the attestations to back up that they are who they claim to be.

Ultimately, trust is the foundation of all commerce. On today’s internet, we outsource trust to enormous enterprises, trusting them with all our data because we have no alternative. With Web3 ID, our commercial relationships can return to being based on trust.

Blockchain technology makes trust a feature of how data is stored. And having trusted data on a blockchain gives you other important capabilities.

For example, you can store a contract on a blockchain, attached to your Web3 ID. A contract can say, for example, that certain data (say, your address) can only be shared with another online entity if that entity meets a condition, such as a limited data sharing agreement being signed by the business, or payment being made to the user. These actions can be carried out automatically if Web3 IDs are integrated into a data management system; the contract triggers actions when its conditions are met.

Blockchain plus Web3 ID also allows for trust verification of key information about people and companies. Third parties can securely vouch for data items in a contract or identity. A bank can attest that a certain Web3 ID holder has sufficient assets for a transaction – without divulging the ID holder’s personal identity.

A Web3 ID trust-based commerce system will hurt some businesses. Companies that hoover up all the information they can and then target people based on their (often AI-powered) analyses of that data—or who resell their data to other data brokers—will find those revenue streams drying up.

To make up for the loss, they will have to focus on the value of the actual product they drive to consumers, the trust-based relationships they have with consumers, and providing value to consumers based on what consumers tell them. Not what their analysis engines derive from their global behavior and online breadcrumbs.

Digital Identity Control = Individual and Collective Well-Being

There is power in ownership. The shift toward Web3 ID heralds a renaissance in online interactions.  Social networks owned and governed by the people can foster communities free from corporate agendas.  With Web3 ID, individuals will network on social platforms owned by people, not solely on a few platforms run by large, profit-based social media companies. This will be possible because Web3 ID-compliant social networks can be interoperable, so many can exist and exchange data with each other. No longer will centralized social networks act as cultural gatekeepers.

Once social networks are owned and controlled by the people using them, new communities (that current gatekeepers might find unprofitable) can emerge and flourish. Blockchain technology allows the physical location of online communities to be decentralized, so instead of a community residing in data centers under the control of a company such as Meta, the data can be dispersed across blockchain networks beyond the reach of a corporation with shareholders to appease. Web3 ID enables a new network of ideas that the current social network system does not.

We especially anticipate what Web3 ID social platforms will mean for content creators. With this technology, they’ll be able to reclaim agency over their work, liberated from the increasing price to play on today’s rent-seeking platforms. They’ll also benefit from a platform that embraces the ideals of Web3 ID. They’ll control how their content is presented on such platforms, as well as who has access to it, and how they build and manage their communities. Creators will be able to collaborate with others to determine the features of their decentralized platform – from the way their work is presented online and how it interacts with a community, how they get paid for their work, and how intellectual property rights are enforced.

Current social network companies extract huge rent fees for using their platforms. Chris Dixon, in Read Write Own, estimates they collect up to 99% of the value of creative works that artists post on today’s sharing platforms. This rent effectively blocks creatives from making a living online.

A new, distributed, people-run social interaction method on the web will allow individuals to show up how they want. It won’t force people, or companies, into a monotonous single profile format. And it won’t be able to extort creators for using the platform since they’ll be able to take their work elsewhere if the price to play gets too high.

And since user profiles will be owned by users just as their identities are, no single platform will be able to monopolize the online social space and control the message, commerce, or how people connect with each other. When people want to join a different platform, they’ll be able to up and leave—and take their identities, networks, and content with them.

Community and Laws

What we’ve been describing is Web3 ID, a new internet made up of data that is owned and run by the individuals who use it. However, moving to this human-centric internet will require community muscle. Communities must unite in their quest for data sovereignty, challenging the status quo and demanding accountability from those who profit from our identities. One consumer telling a bank or automotive manufacturer not to share their data will not make much of a difference. Millions of individuals united in the belief that their private data must remain under their control, will.

Governments must enact robust privacy laws to safeguard individual rights in the digital age. This is what government is for (at least, in the best case): protecting the people and maintaining the flow of commerce so all can benefit, not just the few. Currently, there are several legal projects designed to reinforce privacy working their way through U.S. states, as well as the Federal system. Rule-making is further along in Europe and it’s time for America to catch up.

We support these efforts. None are perfect, but they reflect the growing, global realization that the privacy and identity issue has been pulled far beyond the benefits of individuals to serve large business interests at the expense of the people.

Take Back the Web

We’ve all benefited from the efficiency, pace of growth, and intelligent data use at the hands of giant internet commerce and social platforms. But the costs at the expense of those benefits are starting to add up. Prices are going up, choice is diminishing, and truth is being meted out in drabs to reinforce engagement at any cost. The internet has – to be blunt – been turned against us. (See Tiktok’s Enshittification.)

This trend is unstoppable without external action. Regulators may try, but in the richest countries, lawmakers are captured by the same companies causing these issues. It’s up to people to wield new ideas and new technologies to take control of our identities and demand a more beneficial, fair, open, and equitable online world. Web3 ID offers a path forward and a beacon of hope in an era of digital uncertainty. This is the chance to get it right. Web3 ID will be the place for online interaction that it was always meant to be – claiming our fundamental right to own our data, our identity, and our future, and free from those that we’ll no longer let exploit us.