Identity Authentication & Its Importance For Social Organisations

Exploring Blockchain’s Role in Solving the Identity Authentication Woes of Social Organisations

Table of Contents

  1. Navigating The Identity Authentication Maze
  2. But First: A Briefing On Identity Authentication
  3. The Identity Authentication Conundrum: More Than Meets the Eye
  4. Blockchain: A Guiding Light For Progressive Social Orgs
  5. The Road Ahead: Overcoming Barriers & Charting a New Course

In the labyrinth of social welfare and humanitarian aid, non-profits, NGOs, and charities are the intrepid explorers, braving the complex terrain to deliver aid and support to those in need. Lurking in the shadows of this noble quest is the complicated challenge of identity authentication.

Imagine a world where proving who you are is an insurmountable challenge. This is the stark reality for millions who find themselves in the throes of crises. For charities and NGOs, how do they ensure that the aid reaches the rightful hands? How do they distinguish between the genuinely needy and the deceitful pretender?

As we embark on this journey, we will unravel some of the challenges faced by social organisations and examine how blockchain is helping to guide the way through the identity authentication landscape.

But First: A Briefing On Identity Authentication

Considerations in identity authentication processes

‘Identity authentication’ may not be a part of your everyday vocabulary, but it is a foundational element in our everyday (and increasingly digital) lives. Identity authentication is the silent gatekeeper that allows us to securely interact with online services, set up a bank account, get a job, or access humanitarian aid.

This identity authentication process typically hinges on proving something you know (like a username and password), something you have (like a mobile device or security token), something you are (biometric identifiers), somewhere you are (like your GPS-enabled geolocation), and/or something you do (behavioural patterns).

The verification of your identity (aka identity authentication) is a process we are all familiar with, even if we might not usually call it by that name. Not only does it help ensure your privacy and enable useful interactions, but it’s also a necessity for efficient operations and establishing trust in (and with) the entities that we interact with. Let’s see why this is important for our allies operating in the field of social welfare and aid.

The Identity Authentication Conundrum: More Than Meets the Eye

At first glance, verifying an individual’s identity might seem quite straightforward. Yet, for social organisations, it’s anything but. Picture a war-torn landscape where identities are lost in the rubble or a natural disaster that wipes out the bureaucratic markers of existence. Here, the quest to verify identity becomes as daunting as the aid efforts themselves.

The stakes are high and the challenges multiplied when considering the diverse populations these organisations serve. Lack of formal identification is a major problem and incorrect or fraudulent identification can lead to misdirected aid, leaving vulnerable populations in even more precarious situations.

For social organisations, this not only strains limited resources but also erodes trust amongst donors and the communities they aim to serve. It’s a constant challenge to balance the urgent need for assistance with the requisite of due diligence.

The Authentication Quagmire: A Closer Look

Wars, natural disasters, and displacement can strip people of their identities, both figuratively and literally. In the absence of reliable verification methods, fraudulent claims can proliferate. For example, fraudulent claims for pandemic aid in the US have been estimated at $90 billion. Yikes.

The story of the United Nations World Food Program (WFP) and its groundbreaking Building Blocks project lends hope to the situation. The pilot project used blockchain to assist undocumented refugees with a digital identity, enabling them to access basic services and financial systems.

“The WFP integrated blockchain into its biometric authentication technology, so Syrian refugees can cash in food vouchers at the supermarket by staring into a retina scanner. These transactions are recorded on a private Ethereum-based blockchain, called Building Blocks. Because the blockchain eliminates the need for WFP to pay banks to facilitate transactions, Building Blocks could save the WFP as much as $150,000 each month in bank fees in Jordan alone.”
Jessi Hempel, WIRED

This initiative showcased how blockchain could forge paths to empowerment and dignity. The project not only streamlined aid delivery but it also slashed operational costs, offering a glimpse into how blockchain identity solutions could help aid in efficient humanitarian assistance.

Providing efficient support and avoiding fraudulent claims aren’t the only challenges: handling sensitive personal information raises significant privacy and security issues too. Traditionally, centralised identifiers like email and password are how we have accessed digital services. This allows a centralised database to store your digital information on that platform and unlock access, but it leaves organisations vulnerable to data breaches which can lead to loss of trust, financial loss, and, most importantly, exposure of sensitive personal information.

By now, we’re probably familiar with stories of data breaches and the potential consequences when things go wrong. Organisations must navigate the fine line between verifying identities and safeguarding the data rights of individuals.

Blockchain: A Guiding Light For Progressive Social Orgs

Blockchain as a guiding light for progressive social organisations

Amidst all of these concerns, blockchain appears as a promising technology that can enable user-controlled, secure digital identities and authentication processes. Its potential to transform identity authentication lies in its key characteristics of decentralisation, transparency, and immutability.

Decentralisation ensures no single point of failure, making identity data less susceptible to loss or manipulation. Transparency allows for the verification of credentials without exposing sensitive information, addressing privacy concerns head-on. Immutability guarantees that once an identity is recorded on the blockchain, it cannot be altered or deleted, helping to combat fraudulent claims and ensuring aid reaches its intended recipients.

Enter, Blockchain

For my regular readers and blockchain natives, you can skip the next few paragraphs because I’m rehashing my blockchain explainer from my ‘Blockchain For Charities‘ article. But, for my first-time readers — welcome! — and for the blockchain newbies, read on, you curious explorers.

A blockchain is a decentralised database that is stored on many computers. Each one of the computers stores a copy of the database. The database is sort of like a public library where anyone with the right keys can participate in the library.

Each participant in the library has a set of access keys that identify them and any time they transact with the blockchain. Every transaction (interaction on the blockchain or entry into the library’s ledger) is recorded with a timestamp and signature of who made the entry. Users can then go and inspect the transaction history, and because the transaction history is stored on many computers, it makes it very hard to tamper with (aka immutable).

There’s some cryptography, economic principles, and novel software stuff in there too, all of which contribute to the ability for the blockchain network to run securely and efficiently, but let’s keep things high-level for now.

Not only can the transactions have a monetary value (like trading Bitcoin with another person using the blockchain), but the transactions and corresponding ‘assets’ could represent many things with an assigned value.

Tokens (or assets on the blockchain) may include data like unique media files (read: NFTs), business documents like invoices and contracts, or other (unique) documents like verifiable personal identity documents (IDs).

These documents can now be stored, verified, transferred, and accessed by various approved participants in the library (blockchain network).

Use Cases: Blockchain In Action

Beyond the earlier example in Jordan, other real-world applications of blockchain in identity authentication are already showing promising results:

  • Transparent Donations: By tracking donations on a blockchain, organisations can ensure that funds are used as intended, bolstering donor confidence and encouraging future contributions.

    Binance’s Charity Foundation (which we discussed recently), has helped raise millions for causes like the Ukraine relief effort and global malnutrition relief efforts. These fundraising efforts were all facilitated by blockchain-enabled crypto payments. Binance’s charity fundraising dashboard ensures that payments are easily identifiable, verifiable and traceable from donor to recipient. This is a potent example of how blockchain’s verifiable and public transactions can contribute to the goals of social organisations.

  • Streamlined Operations: Blockchain-based systems can automate many aspects of identity verification, reducing operational costs and allowing organisations to allocate more resources to direct aid.

    Blockchain company mintBlue shows us how blockchain can be used for identity authentication by efficiently verifying documents and payments for, in their case, major accounting firms and the local governmental business registrar. These examples show how manual verification processes can be replaced by verifiable, decentralised identifiers (like unlocking access for verified parties in order to verify unique on-chain documents).

  • Digital IDs: Estonia’s eResidency program or digital driver's licenses usher in a new era of secure, convenient, and interoperable credentials that seek to address the challenges of traditional paper-based credentials.

    The World Wide Web Consortium’s (W3C) standards of Verifiable Credentials and Decentralised Identifiers (like with the blockchain-registered driver’s licenses above) can help ensure we know who we’re dealing with whilst enabling access and interoperability between entities (and different blockchains, for that matter).

  • Transparent & Ethical Supply Chains: Blockchain’s transparent and immutable nature makes it a prime candidate for digitising the supply chain process. This allows consumers and businesses to verify the origin, authenticity and movements of the goods they consume and the ingredients they source.

    The World Wildlife Fund (WWF) has launched a digital platform called OpenSC that uses blockchain and other technologies to track food and other products, helping people and businesses avoid illegal, environmentally damaging, and/or unethically produced goods.

As you can see, blockchain is making clear inroads into the identity authentication maze. Industry standards like Decentralised Identifiers (DIDs) in combination with blockchain’s values of transparency, decentralisation, and immutability make it a powerful ally for mission-driven organisations seeking trust and operational efficiencies.

The Road Ahead: Overcoming Barriers & Charting a New Course

While the promise of blockchain is clear, its path is strewn with obstacles — from technical challenges and scalability issues to regulatory hurdles and the need for widespread adoption. The journey toward blockchain-enabled identity authentication will require collaboration across governments, technology providers, and the social sector. It’s a collective effort to turn the tide, ensuring that the most vulnerable are not lost along the way.

As we navigate the complexities of identity authentication into a world where every individual’s identity is secure and verified, blockchain offers a ray of hope for social organisations. From efficient and transparent fundraising to secure and verifiable digital identities, we can envision a future where aid is swift, operations are efficient, and above all, social organisations are empowered to reach those in need.