Decentralized 101

If you go to the store and buy a loaf of bread you’ll notice a little white box somewhere on the package with a series of lines. This is what we know as a “barcode.” A barcode is an identifier. When you go to purchase your loaf of bread the cashier scans the barcode which pulls up the product and price on the checkout computer.

There are many different kinds of identifiers. Telephone numbers, email addresses, ID numbers, serial numbers, or even URLs that you use to navigate the internet are all identifiers of one kind or another. Most existing identifiers are what we called “centralized,” meaning they are issued by and under the control of an authority. For example, an organization called GS1 issues and manages the barcode on our loaf of bread.

Decentralized Identifiers (or DIDs for short) are a new type of identifier. DIDs allow individuals and organizations to create their own identifiers using systems of their choosing. A traditional identifier is often only useful in certain contexts and is recognized by organizations that we didn’t choose. A decentralized identifier shifts control of identifiers from organizations or entities that issue identifiers to the person an identifier represents.

Why Decentralized Identifiers?

The truth is, depending on the situation you might not care if an identifier is decentralized! GS1 provides a valuable service managing and distributing barcodes for products. Barcodes are all the same type of identifier. This feature makes them easy to understand how to use. In the case of a loaf of bread, it’s not a problem if a barcode is a centralized identifier.

However, centralized identifiers are more problematic in other contexts. For example, if Google goes bankrupt, and closes up shop, my Gmail email address would no longer be valid and I would have no recourse for saving it.

Alternatively, a centralized identifier might needlessly reveal personal information that I don’t want to expose to others. For example, I may not want people to know how tall I am on my driver’s license, but I don’t get to make that decision since that information is controlled and determined by the DMV. When it comes to privacy and control, centralized identifiers don’t quite meet the highest standards.

Since DIDs are controlled by the entity they represent, this gives the represented entity more control over their identifier. Someone could have multiple decentralized identifiers in a single context, for example, to maintain separate personas or identities when they interact with others.

DIDs can also scope how much or how little information is associated with their identifier. With a decentralized driver’s license I could prevent someone from seeing my height when I show them my license since I have control over the content.

If you want or need control over an identifier, decentralized identifiers are the right choice. That’s why Transmute uses DIDs for all of our verifiable credentials. We believe that you should be in control of the identity associated with your sensitive trade documents.