The consequences of identity fraud cut deep into a victim’s life. Perpetrators take out accounts, loans and insurance policies in your name, and proving that others have stolen your identity is not easy. In the Netherlands, the Central Bureau of Statistics has calculated that 1.5% of the population aged over 15 have been a victim. This percentage is increasing with a rise in digital traffic and the increasingly smart professional perpetrators.
Combating identity fraud is very difficult. At the root of those difficulties are outdated notions about how we should and can identify ourselves today. For example, our personal, confidential information is stored in a multitude of databases that often lack robust security systems – numerous service providers, but also banks or energy suppliers.
Blockchain technology challenges this traditional data management by giving control and ownership of personal information back to individuals. Moreover, the features of blockchain provide a much stronger barrier against the weaknesses of the current identity system, which is highly vulnerable to identity fraud.
Raf Oostvogels: “Putting the sovereignty over personal data back in the hands of citizens – away from data processors operating through centralised databases with weak security systems – seems to me a first ground-breaking and necessary step in preventing large-scale identity fraud.”
If blockchain technology can prevent identity fraud, it is primarily due to the construction of the software. Mary Lacity, director of the Blockchain Center of Excellence at the University of Arkansas, describes a blockchain application as “a distributed, peer-to-peer system for validating, dating and permanently storing transactions on a distributed register. This register records the ownership and authenticity of the data, in this case your identity. Adding transactions to the registry is done through algorithms that ensure the completeness of the registry history.”
In short, once a transaction, or a current owner in this case, is validated and dated in the blockchain by the network users, this transaction (i.e. the current owner) cannot be deleted and its transaction can be read by anyone.
That it works in practice is shown by a number of examples that have already been realised. The French IT company Atos has developed a proof of concept for a digital identity using blockchain technology. This digital identity enables citizens to have secure access to online services. Microsoft’s ION decentralised identity platform has been operational since March 2021. On this platform, you can register any digital document that carries a form of identity proof. In Belgium, the Flemish government, in cooperation with the city of Antwerp and a handful of partners, has set up a blockchain project that focuses on a person’s own digital identity. The project, called Blockchain on the Move, is intended to put personal data back in the hands of citizens.
According to Raf Oostvogels, blockchain can offer a solution for identity fraud. As an identity carrier for the government, the technology still has a number of hurdles to overcome. Can it be applied on a large scale? What regulations must be developed? Who is responsible for errors in a decentralised structure? Does blockchain rule out the problem of false identities? What is the cost of identity systems based on blockchain technology and is the technology really up to scratch?
Scientific research will gradually have to provide more clarity on this. According to Oostvogels, however, criminologists should already dare to look further ahead. Blockchain will also radically change the organisation of many criminal phenomena. Are we ready for this new reality?