Talking Blockchain: Team OWI on Samsung, Microsoft, and the Race for Decentralized Identity
Decentralized identity is a frequent debate topic here in the OWI offices. Last week, Samsung announced the formation of a consortium including SK Telecom, KT, LG UPlus, KEB Hana Bank, Woori Bank, and Koscom. The consortium will be working to develop an app-based identity authentication solution, which will first be used to issue and distribute college graduation certifications.
There’s been a subtle pattern forming in the past few months. In May, Microsoft announced a plan to build a decentralized identity network on top of the Bitcoin blockchain. In early July, Fujitsu announced a plan to develop a blockchain-based digital identity solution. Then shortly after the Samsung announcement, LuxTrust and Cambridge Blockchain launched a private beta for (three guesses) a digital identity authentication platform built upon (you guessed right) blockchain-based software.
Long story short, there are now just a few more cooks in the decentralized identity kitchen.
These companies join industry veterans like Evernym and uPort in the race to develop the best self-sovereign “identity” solution (see our first blockchain intelligence report for why “identity” is too broad of a term) and snap up the most market share. When I brought up decentralized identity as a topic for this blog post, our advisory team had a lot to say:
Simeon: This announcement is very exciting! It is wonderful to see well-established companies coming together from disparate areas of the identity ecosystem — banks, mobile carriers, hardware developers, and security firms — to solve this fundamental challenge. But as with all blockchain press releases, I think there is reason to be wary. We have seen big names entering the space for years, but where are the solutions? Words are cheap – it’s great that this segment is getting more attention, but I’ll be even more excited if this coalition can come up with a viable platform and illustrate sustained market adoption.
Travis: It’s a classic carrot vs. stick problem – either you provide drastic improvements and efficiencies that are appealing enough to attract customers, or you force adoption by making a particular platform mandatory for access to necessary services. In countries where enterprises aren’t able to provide enough incentives to join a platform, governing bodies stepped in – think India’s Aadhaar or China’s Resident Identity Card.
Kaelyn: I’m always interested to see a private-sector consortium this high-profile working to build a blockchain-based platform specifically targeting digital identity, rather than focused on payments or money transfers. It doesn’t surprise me that SK Telecom is on board, because the company has a widely-adopted mobile identity authentication solution itself. I’m with Simeon — we’ve seen big names in big groups with big announcements for a few years now. My main concern: what’s the revenue model? I don’t necessarily think that government is the only path here, but we have seen so many blockchain startups and consortiums come up with solutions that ultimately fall short due to failure to create some kind of sustainable monetization. How will this consortium differentiate itself from the rest of the pack?
Cameron: Much of the public debate around self-sovereign identity (SSI) and decentralized identity has been among identity professionals focused around the technical margins. The community is focused on assessing proposed solutions from a technical/structural angle, and I worry that we may be missing the forest for the trees. The core challenges that we face in driving adoption of next-generation digital identity solutions are not questions of technology, but those of business development. We currently have many competing platforms emerging, all without widespread enterprise or consumer support. The victors will be determined not by a battle of technical specifications, but by which platform builds a successful narrative to explain to institutions and end-users alike that adoption of user-centric digital identity offers tangible benefits in cost, user experience, and risk mitigation.
We’ve written before that blockchain is not the silver bullet for identity, but called out the growth potential for verification and authentication uses cases – indeed, the large number of companies within and entering the space are indicative of the opportunities available. We’ll be sharing our observations over the past year in our upcoming annual blockchain report (look out for that in September!) and keeping a close eye on upcoming developments within decentralized identity space.
The key takeaway: the biggest lift is getting users onboard. You can have the most innovative solution and still fall flat if you don’t have a user base. We’re encountering a bit of a chicken and egg conundrum, where enterprises are reluctant to partner without an established user base and users are unwilling to join without an established network with demonstrated utility. The Samsung announcement piqued my interest due to the substantial existing user base of Samsung and its telecom and bank partners – now it’s a matter of whether this coalition is able to produce a viable platform.
What do you think it will take for decentralized identity to take off? And more importantly, whose team are you on in the OWI blockchain melee?