Blockchain in identity management

How to Implement Blockchain for Identity Management?

Estimated read time: 10 minutes

Wondering about how to implement blockchain for identity management solutions?

This is an excellent market that should be explored.

What is identity management software?

Identity management software enables organizations and individuals to effectively administer their identity management processes. An identity management process is designed to identify, authenticate, and authorize individuals to access organizational software resources.

These resources include the network, applications, and just about any authorized digital information. Read more about this process in this SearchSecurity definition.

It is also right to consider identity management as a subset of the ’Identity and Access Management (IAM) process. Read more about it in “What is IAM? Identity and access management explained”.

’Identity Management‘ (IdM) software helps the administrators of an organization to clearly define and modify a person’s role in the organization and authorize the relevant access to them. This software also enables administrators to track users’ login and activity on the organizational computer network. This enhances operational security.

As a result, IT administrators can support the governance of IAM and manage risk. Organizations also use IdM software to meet their regulatory compliance requirements. Read about it in this Webopedia definition of identity management.

The importance of identity management software

Most organizations, whether a business, a government organization, or a non-governmental organization (NGOs), work in an environment characterized by stringent data privacy regulations. Some sectors like healthcare and financial services have even high regulatory compliance requirements.

Given this context, an IdM is very important, due to the following reasons:

  • It helps in governing and managing the overall IAM program in the organization.
  • Records from the IdM software enable organizations to assess their IAM effectiveness.
  • The software makes it easier to administer IdM, access management, limit access to sensitive IT assets, etc.
  • Analytics from the IdM software helps organizations strengthen their IT security practices.

Read more in “Identity and access management and its importance for organizations”.


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Identity management challenges today

No doubt that you are exploring blockchain identity management as today‘s IdM systems face numerous challenges. These are as follows:

  • User identity data resides in silos, therefore, organizations find it hard to verify identities and approve access requests.
  • IT administrators in charge of the IdM system often lack information about which team member requires access to which set(s) of sensitive data.
  • Reconciling access levels against the level of confidentiality required in a system is often hard, which is another fallout of data residing in silos.
  • In absence of well-structured insights, there are often excess privileges granted to sensitive systems!
  • ’Separation of Duties‘ (SOD) is hard to maintain without sufficient insight.
  • The above points often result in a manual override of the IdM system. This requires additional documentation, which increases costs.
  • When auditing and certifying the system, reconciliation becomes hard due to all of the above reasons.

Read more about these challenges in “Meeting identity and access management challenges in the era of mobile and cloud”.

How can blockchain help with identity management?

Blockchain technology promises to make identity management better due to its following characteristics:

  • It is decentralized and therefore doesn’t require a central authority to control the data. This is true with Bitcoin and the Ethereum network.
  • Using modern cryptography consensus algorithms helps with securing data.
  • The immutability of records facilitates trust.
  • Smart contracts are immutable pieces of code that can autonomously uphold contractual terms and conditions, with irreversible outcomes.

Read more about it in the Investopedia definition of blockchain.

An identity management blockchain solution offers the following advantages:

  • User identity only needs to be stored once, therefore, there is no need to replicate it in silos.
  • Enterprise blockchain networks can help identity management administrators in businesses and other organizations. They can define appropriate roles and access all user identity information.
  • Immutability of records will help the IdM administrators, moreover, auditors will find their work easier.
  • Using smart contracts will make access provisioning requests more efficient.

Read more about these advantages in “Understanding how blockchain is changing identity management and why it is better than traditional methods”.

The market of blockchain for identity management solutions

Blockchain when coupled with identity management is creating significant business opportunities.

This “Zion Market Research” (ZMR) report highlights, that the global blockchain identity management market will reach $3.45 billion by 2024. The CAGR between 2018 and 2024 will be an astounding 80%. It’s time to get developing!

Building a blockchain identity management solution

I will now take you through the steps to use blockchain for identity management, which is a development project.

Step #1: Project scoping and stakeholder expectation management

It is likely that you are developing a blockchain identity management system for businesses, governments, or even NGOs. In other words, you are developing it for organizations that will likely operate under strict privacy regulations.

Public permissionless blockchains like the Bitcoin network make information available to anyone that joins the network, however, they are not suitable for identity management. You will need to use an enterprise blockchain, which provides for data privacy.

Read more about the difference in “Public vs private (permissioned) blockchain comparison”.

Keep in mind that project scoping and stakeholder expectation management are important. Blockchain is a niche skill. Enterprise blockchain is a niche even within that. Project stakeholders need to allocate a sufficient budget, and expect a reasonable schedule, in view of these.

Step #2: Select your blockchain framework: Hyperledger Fabric

I recommend you use Hyperledger Fabric as the blockchain platform for the following reasons:

  • Fabric is managed by the Hyperledger Consortium, which is led by the Linux Foundation with contributions from many other organizations like IBM, Cisco, Intel, etc. Support from technology giants bodes well for the platform.
  • It‘s among the most matured enterprise blockchain platforms.
  • The platform comes with several advantages, e.g., a pluggable consensus algorithm, pluggable membership services, etc.
  • There is a channel technology for confidential transactions, moreover, there are database services like CouchDB.

Read more about Hyperledger Fabric in “Pros and cons of Hyperledger Fabric for blockchain networks”.

Step #3: Onboard a project team

You need a project team with the following roles:

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  • Business analysts (Bas);
  • UI/UX designers;
  • Hyperledger Fabric developers;
  • Testers;
  • A project manager (PM).

IBM offers extensive Hyperledger Fabric tutorials, and your team might them useful. Note that I have assumed that you will use a ’Blockchain as a Service‘ platform, therefore, you will not need to hire blockchain infrastructure experts.

Step #4: Select a ’Blockchain as a Service‘ provider

Setting up a Hyperledger Fabric blockchain network entirely from scratch can be tricky. You will need to address aspects such as the infrastructure, network, etc. I have already covered this in our guide “How much does it cost to build a blockchain project?”.

I recommend you use the IBM Blockchain Platform, which has the following advantages:

  • IBM handles the infrastructure, networking, storage, etc., therefore, you can focus on the development.
  • It‘s built using Hyperledger Fabric, moreover, you get a secure, production-ready, and fully-managed platform.
  • You can access development tools, all Fabric features, and industry code samples.
  • There are flexible pricing plans, and all of them include 24x7x365 support.

Step #5: Prepare to write “chaincodes”

Smart contracts are called “chaincodes” in Hyperledger Fabric. You can code them in “Golang”, Java, or Node.js. When you develop a business application on Hyperledger Fabric, it will use chaincodes since those will contain the business logic.

Your team might benefit from a tutorial on writing chaincodes. Check out this Hyperledger Fabric chaincode tutorial.

Step #6: Use development tools and guides

With the “IBM Blockchain Platform”, you can use several development tools that will expedite the project. These are as follows:

  • Hyperledger Composer: This is a collection of JavaScript-based tools. With this, you can develop a Hyperledger Fabric blockchain app faster. If you use Hyperledger Composer, then you write chaincodes faster, without using Golang. Read more in “Blockchain basics: Hyperledger Fabric and Hyperledger Composer”.
  • IBM Blockchain Platform extension for Visual Studio Code: Developers can code blockchain applications easily with the help of the IBM Blockchain Platform extension for VS Code. Programmers can use it with Hyperledger Fabric.
  •  IBM blockchain platform supports chaincodes written in Golang and Node.js. Check out the IBM Blockchain Platform “Getting Started” guide.
  • There is also a Node.js ’Software Development Kit‘ (SDK) for Hyperledger Fabric. You can expedite the development with it, and you can access it here.

Step #7: Write chaincodes

Your application systems‘ chaincodes will need to reflect your requirements. You can review samples of Hyperledger Fabric chaincodes via this link, although they don‘t cover an identity management use case. However, this review will help you understand the best practices for writing chaincodes.

Step #8: Build management, test, and deployment

Now that you have written your chaincodes, you need to manage the build, test the code, and deploy. IBM blockchain platform enables you to use the preferred Hyperledger Fabric ’Continuous Integration‘ (CI) tools.

Review “Getting to know the Hyperledger Fabric continuous integration (CI) process”. This will guide you about the following:

  • The “Docker images” pertaining to Hyperledger Fabric, since you will use the Docker containers for your project;
  • The “Build” process;
  • Using Jenkins for CI;
  • Testing your code, including unit testing, integration testing, and system testing;
  • The release process.

Step #9: The project management

This development project requires end-to-end project management. Your PM should be conversant with the project management best practices. Our guide “Project management: 10 best practices” can help you.

You also need to use effective project management tools. There are several options, e.g., Asana, Trello, Zoho, etc. We have a guide for good PM tools. Check out the guide to the best Agile PM tools.

Key considerations while developing a blockchain-powered digital identity solution

Creating digital identity solutions using the “distributed ledger technology” (DLT) or blockchain can be complex. That’s because entrepreneurs need to keep various considerations in mind. Consider the following questions:

1. Can you use Ethereum to build an identity verification and management system?

Ethereum is popular. Ether (ETH), its’ native cryptocurrency ranks second in terms of market capitalization. Many entrepreneurs create decentralized apps (DApps) using the Ethereum blockchain platform.

Can you create a decentralized digital identity management system using Ethereum though? This question assumes importance since Ethereum is a public blockchain network. Anyone can join this network. It’s completely decentralized.

Let’s analyze the advantages and limitations of Ethereum when creating a decentralized identity management system.

1a. Advantages of Ethereum while developing a digital ID management system

Ethereum offers the maximum extent of decentralized security that any blockchain network can offer. Consider the following:

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  • Ethereum is a decentralized P2P network. Unlike a network with a centralized server, Ethereum doesn’t have a “Single Point of Failure” (SPOF).
  • This blockchain network offers immutability. The data you store on Ethereum is tamper-proof.
  • Users of the Ethereum network already use digital signatures with private and public keys.
  • There’s a rich ecosystem of blockchain application development tools for Ethereum. Many start-ups took advantage of it. They developed their DApp and cryptographic token using Ethereum. Entrepreneurs created white papers for their projects, and they launched their ICOs (Initial Coin Offerings).

1b. Disadvantages of Ethereum while creating a digital identity management system  

Questions exist about whether public blockchain networks like Bitcoin and Ethereum can comply with key privacy regulations like GDPR. Ethereum faces the following challenges in meeting the GDPR requirements:

  • Confidentiality: GDPR has confidentiality requirements for personal data. Any Ethereum user can view the transaction history on Ethereum. If you store sensitive information like date of birth and drivers’ license number on this network, then other users can view them. You can’t implement user control mechanisms on Ethereum to ensure confidentiality.   
  • Right to erasure: GDPR mandates the “right to erasure”, which is also known as the “right to be forgotten”. This requires the permanent deletion of data. Ethereum can’t meet this requirement since you can’t delete data on this network.
  • Right to rectification: GDPR mandates the “right to rectification” of personal data. Ethereum can’t meet this requirement. You can’t modify data stored on the Ethereum blockchain network.
  • Implementing privacy measures during the design phase: GDPR requires you to implement privacy measures during the design phase. Ethereum, a fully decentralized public blockchain doesn’t support this requirement. You can’t modify the basic characteristics of the Ethereum network to cater to your specific data privacy requirements.

Note: There are efforts to utilize the power of Ethereum for decentralized identity verification. This comes in the backdrop of the increasing clout of Social media and technology giants in the digital world. These technology giants offer identity services. However, they harvest too much data from users. This includes personal identity information. Many users of these services are increasingly uncomfortable with this. Users are also exposed to risks like data breaches and identity theft. Spruce, a decentralized identity software provider plans to use an Ethereum-based sign-in solution to offer an alternative to uses.  

2. What level of complexity do you want to offer in your proposed digital identity management system?

You need to take a close look at the level of complexity in your system. Remember that you need highly experienced developers to build complex software solutions. That increases your hiring lead time, which directly impacts your project schedule.

The complexity of your proposed system will vary based on the following:

  • Functionality: What do you plan to offer? E.g., will your system offer functions like KYC (“Know Your Customer”)? To take another example, do you plan to build a self-sovereign identity management system? Features involving “heavy-lifting” will make your system more complex.
  • Interoperability: Do you want to make your proposed identity management system interoperable with different identity management systems? Budget for higher complexity.
  • Technology: Do you plan to use technologies like IoT, biometrics, etc. along with blockchain? The more cutting-edge technologies you use, the more complex your project is.
  • Authentication: How do you plan to handle the authentication and validation processes? Will you use decentralized identifiers? These questions determine the complexity of your project.
  • Data privacy: How do you plan to ensure the privacy of sensitive data? Examples are verifiable credentials from the issuers of identity documentation.

You ought to offer a high-quality user experience. Processes like user onboarding should be simple. That sounds simple, however, it’s not easy to achieve. Advanced features and technologies will make your project more complex. Plan your hiring process accordingly.

Developing a strategic app using blockchain for identity management?

Are you planning to launch a strategic business app that combines blockchain and identity management? In this article, I covered several aids and tools, e.g., IBM blockchain platform, Hyperledger Composer, etc. These can expedite the project, however, the fact remains that it‘s a complex development project.

I indicated earlier the manpower costs relating to Hyperledger Fabric developers and PMs with blockchain development project experience.

Keep in mind when hiring such niche skills that there is always a long lead time when you hire people with niche skills.

If you don’t have experienced blockchain developers, you will do well by engaging a professional software development company with significant blockchain development expertise.

Such a development partner should be able to provide you with the required manpower, and the end-to-end project management that will rid you of any headaches.

You should do a comprehensive background check before engaging the services of any development partner. Consult our guide “How to find the best software development company?”.

Contact DevTeam.Space if you need help with building a blockchain-based identity management system.

Frequently Asked Questions

What is blockchain identity management?

It is the use of blockchain-based software solutions for identity management. Current solutions under development will offer universal digital identities confirmation.

Is blockchain more secure than the existing identity management system?

To date, there has been no recorded breach of a blockchain where the attacker has managed to alter records. This is due to the 51% rule which requires over half of the network’s nodes to authorize any change ensuring data security. However, hackers have managed to exploit poor code to successfully undertake attacks. We can say blockchain identity management software is much more secure than a traditional identity management system.

Are there any blockchain ID solutions available now?

IBM is one of several companies that offer a secure blockchain-based solution for personally identifiable information. IBM Verify Credentials is free to use and available now.


Alexey Semeney

Founder of DevTeam.Space

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