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The Future of Digital Identity

The role of digital identity continues to grow in our everyday lives. Here's what you can expect to see next.
Mackenzie Pautler
December 19, 2023

Your digital identity — by definition — is who you are online, and how companies determine that you are who you say you are. While the concept itself isn’t entirely new, the awareness around it has grown exponentially over the past few years as more of our day-to-day lives have moved online.

To better understand the trajectory of digital identity, we must first understand its history.

The Origin Story of Digital Identities

Digital identities were created in the 1960s, when Fernando Corbató — a world renowned computer scientist who spent his entire career at the Massachusetts Institute of Technology (M.I.T.) — invented the first password. 

Once the cornerstone of digital identities, passwords have continued to evolve with time and with the increased usage of passwordless authentication, which uses other methods (such as a PIN or biometrics) to verify a user. Simultaneously more businesses and personal tasks have migrated online, with more people using their digital identities several times a day to do everything from buying groceries and paying bills to sharing vacation photos on social media and receiving virtual tele-health care.

With the proper safeguards in place, your digital identity makes it easier to get things done quickly without having to sacrifice convenience or cost. All too easily, however, it can become a double-edged sword. The more you use your digital identity — especially across different devices — the more valuable to cybercriminals the information it’s composed of becomes to cybercriminals. That’s why we’ve created Proof, the world’s first identity-assured transaction management platform.

Recent Digital Identity Trends 

Over the past few years, we’ve seen a multitude of trends emerge that have only further validated the critical need for what we’ve since created with Proof. Last year (2022) alone:

Customers demanded more transparency.

As customers realized how much data companies collect, they began asking for more information about the data in their digital identity, how it’s being used, and how it can be protected.

Companies focused on their digital identity systems. 

By effectively managing the digital identities of their customers and employees through digital identity systems, companies were better able to streamline the use of digital identities across multiple apps and systems, improving the overall user experience.

More privacy legislation was introduced. 

In 2022, 27 states either introduced new legislation or carried over laws from 2022, and multiple states passed privacy laws, including the impactful California Consumer Privacy Act (CCPA).

Creating national eID schemes gained more attention.

The Digital Europe Programme, which was founded in 2021, gained more traction and began turning into reality. The goal is to create national electronic identification schemes (eID) that allow European citizens to move across borders and use national eIDs when accessing online services.

What’s to Expect Next for Digital Identities

In addition to the digital identity trends we’ve seen emerge to date, here are a few you can expect to see — and should proactively prepare for — throughout the remainder of 2023:

Increased fraud.

Based on the experience of past recessions, Forbes predicts an uptick in digital identity fraud if the U.S. goes into a recession before the end 2023, as it’s been expected to do.

Government agencies will continue to navigate issues with digital identities. 

With reports of digital-identity-related issues with taxes and unemployment claims in 2022, the U.S. government will continue to focus on improving its systems for citizens. For example, the IRS recently removed facial recognition for authentication due to concerns and glitches.

More privacy legislation will pass.

Currently, the future of the American Data Privacy and Protection Act (House Resolution 8152), which will supersede state privacy acts, is not certain. Florida, Oklahoma, and Washington are states to watch in terms of privacy laws in 2023. 

Passwords will become less central to digital identity.

Because of the vulnerabilities and resources that maintaining passwords requires, many organizations are moving towards passwordless authentication. Forbes predicts that 80% of Fortune 500 companies will have formal passwordless authentication projects in 2023. Many companies will likely accelerate the projects if fraud increases due to the recession.

More companies will use digital identities to deliver personalization.

While companies used to focus on managing digital identities, more companies will begin using digital identities to deliver more accurate personalized experiences, to differentiate themselves from competitors.

Our mission with Proof is to set the gold standard for digital identity verification. Welcome to the future of trust in the digital world.

Learn more at proof.com

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