Digital progress is in full swing. Digital identity is an important topic for many. The digital representation of its identity brings a number of advantages, but also aspects related to security. CPI Technologies specializes in creating a digital identity based on NFT. But what are the advantages of a digital identity based on NFT?
What is a digital identity?
First of all, it should be said The digital ID is not a digital ID card. However, the digital identity fulfills the purpose of self-identification. Because on the Internet you have to confirm your identity over and over again. Usually the process is the same: If you want to register somewhere, you will be asked for your email address. After entering you will receive a link via email. There is also the option to use your cell phone number, where you will receive a code via SMS. When registering, you must also provide personal information such as age, gender or place of residence. If you want to set up a bank account, you will be asked for ID or proof of address, among other things. A blockchain-based digital identity can store all of this information so that in the future you won’t have to enter all the data every time you log in. You will never have to enter your email address and password again.
NFT-based digital identity
NFT is traded on the blockchain. Blockchain is decentralized, so it is available to everyone and does not require any platform. To make a purchase, you need a wallet. The primary goal of digital identity design via NFT is to protect user data while at the same time making it verifiable to every provider who needs it. Web3.0 offers the advantage of connecting its wallet, on which the NFT is stored, to websites. With one click you can confirm all your personal data there. Whether it’s your ID card number, cell phone number, place of residence, or simply an email address. The data can then be recalled with a single click when registering at a new location. Providers can trust this data and no longer have to verify it. Thus, registration is faster than having to wait for a code via SMS or email or having to hold your ID in front of the camera every time. For example, you can open a new bank account with just one click. Anonymity is also granted by the NFT-based digital identity. Everyone decides for whom to decrypt their data. Nobody has access to an address, name, or phone number unless they are actively granted access.
Web3.0’s linking technology to its wallet is used by CPI Technologies for security tokens, for example. These are tokens that represent a financial product, such as a piece of real estate or a share. When buying shares or real estate, the rules dictate that it should always be clear to the issuer who the buyer is. It should not be possible to acquire a share in their portfolio without the issuer knowing who owns that portfolio. The advantages of decentralized finance (DeFi) can also play a role in regulated securities.
In addition to storing personal data, an NFT-based digital identity has other advantages. The NFT on which the digital ID is located is not transferable. So you cannot put it up for sale on an online trading platform. In addition, it is insured against loss. If for any reason you lose access to your wallet on which your NFT is stored, a pre-defined specific person can revoke it.
An NFT-based digital identity provides anonymity, privacy, and the opportunity to make purchases or sign ups as quickly as possible. In addition, security is guaranteed because you have the option to delete the NFT externally. There are only the advantages that the new type of digital identity brings with it. In the future, this method will replace the classic KYC (know your customer) procedure. Life in Web3.0 will get easier and easier in the future. Logging into a website or even opening a new bank account has never been so fast before. The NFT-based digital identity is a major advance in technology and offers a glimpse of what’s to come in the future.
Author: Maximilian Schmidt is the founder of CPI Technologies, a full-service agency. The company specializes in software development in the areas of blockchain, finance and artificial intelligence, as well as marketing and fundraising. https://cpitech.io/de/