Why Digital Identity Is Even More Important in the Metaverse￼
Web3 and the metaverse are here to stay. To prepare for safe metaverse participation, though, internet users need to begin assimilating into this new digital space, and obtaining a digital identity (ID) is one of the first steps. In fact, showing a user-controlled digital ID could become a prerequisite to accessing metaverse goods and services in order to protect businesses and consumers from fraud or unscrupulous behaviors.
What Is A Digital ID?
A digital ID is an electronic certificate proving identity and eligibility. Sometimes issued by a Certification Authority (CA), digital IDs link an organization’s or individual’s identity with their public key (a numerical value used to encrypt sensitive information). Digital IDs can include the following types of personally identifiable information:
• Issuing CA
• Digital signature
• Digital ID serial number
• Public key value and expiration date
What if you already have a government-issued ID? Is a blockchain version of a driver’s license truly necessary? People need an ID to enter clubs or travel, and the metaverse will likely eventually require ID for digital versions of these activities. As in the physical world, certified identification is essential for consumer and business protection in the metaverse. Web3 and metaverse leaders should concentrate on building a secure infrastructure, and digital IDs are an important component of this new connected world.
Though Web3 promises to make our online interactions safer, we cannot forget what we’ve already learned about the internet and fraud: Identity theft increased by 42% between 2019 and 2020, costing Americans $712.4 billion, according to Aite Group research. Further, Web3 will not be created overnight. While we wait for a better system to be built, metaverse fraud opportunities are nearly infinite.
The risk is mitigated, however, when we give business owners tools to safely verify their customers’ identities. Likewise, when metaverse users know that digital IDs are certified and secure, engaging with other users (whether recreationally or commercially) becomes a safer experience.
Digital ID Must Be User-controlled
If safety and risk mitigation are crucial for establishing healthy metaverse experiences, what is the most effective way to create and manage digital IDs?
First off, outside of CA validation, digital IDs must be user-controlled. Individuals should determine when and how much personally identifiable information they reveal to participate in the metaverse. Because, the level of ID disclosure should depend on the metaverse experience.
Buying a million-dollar NFT, for example, should require more verification than attending a digital New Year’s Eve party. The former should involve a criminal history check and proof of funds, while the party experience may only necessitate age verification. Sharing a crypto balance with the New Year’s Eve party organizers wouldn’t make sense. User-controlled digital IDs allow individuals to securely give requesters only the most relevant information.
Why Digital ID Is Necessary, Especially in the Metaverse
The metaverse presents a fascinating array of possibilities. However, its digitally native existence creates a unique set of identity verification challenges. How can an online business verify that it isn’t engaging with scammers? How will event owners confirm that their attendees are age-compliant?
The safest markets will meet legal requirements and ask users to share their digital IDs to gain permission for entry. Presenting digital IDs as a prerequisite for participation will make risk management tenable for liquidity providers, decentralized application (dApp) developers and institutional participants. Legitimate users will likely agree to meet meticulous verification requirements in order to protect their assets. The outcome is a more healthy digital enterprise users trust.
Helping Humans Beat the Bots
Proving one’s humanity is pretty straightforward in the offline world. However, bots often plague online experiences by relentlessly performing automatic, predefined tasks. Cybercriminals can deploy bots to manipulate clicks, crash platforms, take over accounts and spam users.
Bots can be especially damaging to NFT owners, like buyers who lost a collective $150K in NFTs to scammers using attack bots. Scammers can use bots to artificially drive NFT prices up or down by placing overly low bids, buying large numbers of NFTs at the lowest price or bidding above market price on their own NFTs.
Digital IDs require users to prove that they are adult human beings who aren’t violating sanctions or anti-money laundering or combating the financing of terrorism laws. Requiring metaverse users to show digital IDs may eliminate (or significantly reduce) the presence of bad bots, making the metaverse a more hospitable place for commerce and community.
Digital IDs Are Essential in the Metaverse but Practical for Everyone
Ensuring a financially and socially secure environment in the metaverse is impossible without digital IDs. The nature of metaverse experiences necessitates a digital equivalent to identifiers like driver’s licenses and passports. However, it would be a mistake to assume digital IDs only have utility for Web3 activities.
Businesses can benefit from digital IDs right now. For example, bars and clubs that require age verification can accept digital IDs instead of physical cards. Relying on digital IDs is a quick, automatic alternative that avoids the need for human intermediaries (and subsequent human error). Digital IDs also bridge institutions to DeFi services, creating more equitable financial possibilities for everyone.
Some analysts project the metaverse market to reach trillions of dollars in the next decade. While that number may ultimately remain in the billions, all evidence suggests that the metaverse is here to stay.
In conclusion, identity is a critical safety layer of the new Web3 infrastructure. With thoughtful development, digital identity can help protect individuals and companies from a broad range of fraudulent activity.