Microsoft has announced in an official post that the company will embrace decentralized identity systems built on blockchains such as Bitcoin and Ethereum. One of the main corporations on the financial market will support blockchain-based decentralized IDs (DIDs) via the Microsoft Authenticator app.
“After examining decentralized storage systems, consensus protocols, blockchains, and a variety of emerging standards we believe blockchain technology and protocols are well suited for enabling Decentralized IDs,” today’s announcement post from Microsoft reads.
Identity is a long-standing platform with blockchain technology that has nothing to do with payments or cryptocurrency. In a new post, Microsoft names three particular systems - Bitcoin, Ethereum, and Litecoin - as appropriate bases for DIDs.
Why is this a good decision?
As Bitcoin technology proves itself, it leads to reliance on trust in third parties. No government or other centralized institution can control and review identities that are pinned to a public blockchain. A public blockchain guarantees that the base layer of the identity protocols is sufficiently decentralized and incorruptible.
Earlier critics have claimed that identity systems built on public blockchains are very costly and, furthermore, difficult to scale, but Microsoft’s post shows that layer-two systems can be used to reduce the necessary number of expensive on-chain interactions.
What can it be used for?
At this stage, it is hard to say what exactly Microsoft wins while supporting the concept of decentralized IDs. Nevertheless, we can make some deductions from the present state of the Internet.
LinkedIn, being a kind of a reputation system for an individual's past education and work experience, is the most obvious application for DIDs within Microsoft products.
In perspective, this could be a play from Microsoft in the decentralized Internet space. There they may present themselves as a company that won’t build their future on the financial market around spying on their users, which is what is widely seen from the likes of Google and Facebook.