We live in a highly digitalized world, where the majority of the population and businesses depend on the internet for fast, easy, and seamless interaction and communication. As all this happens, it’s becoming more difficult than ever to keep sensitive information secure and tamper-proof. That’s because online identity verification is a serious challenge for individuals and business entities worldwide.
Online verifiable identity is an ever-present need, but the term has always been alien to centralized internet identity sources. Thankfully, non-fungible tokens (NFTs) are becoming an excellent tool to prove there’s a particular user behind a screen that we can attribute stuff to their online presence. While the chatter surrounding NFTs has previously focused on digital collectibles, some platforms are now using the technology as a form of identity when onboarding new users to prevent fraud.
NFTs have solely been used to curb the hazard of internet identity theft for intellectual properties in the past. Still, it’s emerging that they can play a role in eliminating online anonymity. This article explores how NFTs can be used to enhance cybersecurity and online identity management by creating a protected and un-hackable solution for firms and individuals seeking to deploy them to secure their data and solve online identity verification.
The Online Identity Verification Crisis
The fact that 49 million consumers were victims of identity fraud and recently incurred losses totaling $56 million is proof that fraud is becoming commonplace. It’s now so easy for fraudsters to access people’s personal information online that governments and businesses can no longer rely solely on social security numbers (SSN).
Institutions that previously asked for ID cards or passwords are discovering that those methods alone are no longer accurately verifiable identities since fraudsters use bots to perform account takeovers or easily forge physical documents. As data breaches become common and fraud techniques grow more sophisticated, the one-size-fits-all identity verification methods are being replaced by a technology that can contextualize and customize verification for each individual – NFT technology.
NFTs and Online Identity Verification
NFTs, built on blockchain technology and represented by unique cryptographic tokens, introduce a layer of security that ensures individual assets can be tracked and verified. Designed as types of digital assets that define specific rights and privileges, they’ve primarily been used to represent scarce items and collectibles virtually. Their uniqueness allows for complex security and identification.
Blockchain technology has, through NFTs, created new standards of cybersecurity, and governments and companies seeking to keep data safe from cyber assaults can use the technology to track people’s identities using smart contracts. Smart contracts are blockchain-based self-executing contracts designed to enforce the terms of deals automatically. Since they are designed to build trust and implement tamper-proof and transparent security, they can become handy in preventing fraud and identity theft.
How NFTs Can Influence Online Identity Verification
In an era where replication of one’s online identity has been frequent due to existing identity systems’ design and security flaws that have led to personal security breaches, digital identity has been hard to verify. Attaching digital identities to the blockchain through NFTs can be an effective way to address online identity so that no one can alter personal identity information.
Since NFTs are digital assets featuring programmed scarcity, governments can achieve this goal by establishing people’s digital identities and NFTs on public blockchains as a unique tool representing ownership of digital assets and several aspects of personal online identity, especially as we head towards Web3 and the metaverse.
For example, there are already proposals for users of an NFT-powered metaverse to use things like avatars and digital apparel that can be migrated across platforms using non-custodial crypto wallets. Several companies across the board are already designing blockchain-based online identity ecosystems that offer companies and individuals full ownership of their unique digital identities.
The potential to store online identities as NFTs is a practical possibility for mitigating the threat of fraud associated with the ability to create fake IDs and bot accounts. Using living avatar NFTs will allow users to verify their online identities on Web3 and the metaverse using credentials and personal information locked safely on the blockchain. Developers can assign different individuality-based unique features for checking and verification.
Some examples of how NFTs can be used to promote online identity verification include:
Integrating Security Features
The use of cryptography by NFTs will improve protection by providing a supplementary layer of security that enterprises and individuals require to secure their online identities. Institutions can incorporate NFT elements like encrypted messaging and data storage to generate digital signatures for transactions. This will enable identity providers to interact with NFTs via authentication to eliminate cases of user impersonation.
Smart Encryption and Validation
NFTs are currently used to secure digital assets using smart encryption and validation. This programmed system is simple yet elegant, enabling internet users to acquire and trade them. Smart encryption and verification can improve identification and security in private and public blockchains.
NFTs’ encryption and validation technology facilitates the creation of digital signatures that any fraudster can’t reproduce. The technology has already raised the bar in the digital art sector by preventing others from stealing other artist’s intellectual rights. The same system that embeds every single artwork with a unique digital signature that identifies a project to its owner can be used to provide online identity verification.
Provide Secure Storage
Blockchain technology’s primary element of decentralization, which makes it resistant to corruption or hacking and therefore the ideal platform for NFTs, implies that the online identity stored on it will be immutable and can’t be altered once it’s been recorded. The complete transparency of the blockchain means that everyone can see any transaction on the blockchain, meaning that any attempt to tamper with NFT IDs will be noticeable throughout the network. The emergence of NFTs for online identity verification is becoming an essential change in the way people’s online identities can be verified and secured. The integrity of blockchain technology guarantees personal data validity and security without the need for third parties to monitor the network. With NFT-based authentication, institutions could use an individual’s identity stored on a block’s hash to verify their identity in a decentralized system that helps achieve a self-sovereign digital identity.