Nowadays, digital identity and physical identity tend to merge. While the physical identity represents "all the elements which, according to the law, contribute to the identification of a physical person", the digital identity gathers the information (data) that an Internet user leaves, in the wake of his navigation on the Internet. It is thus a sum of elements contributing to identify a physical person, on the Web (Name, first name, age, IP, profile, e-mail address, address, etc).
Different types of digital identities :
From our perspective, there are two distinct types of digital identities:
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A social identity, created by ourselves, especially on social networks
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And a "product" identity also created by ourselves, but without our knowledge. It gathers our consumption habits, the purchase of goods and services etc. in short, all the data that Internet users disseminate in their online behavior. Companies love this identity!
They analyze your habits and propose targeted offers or sell your data to advertisers. This is the basis of e-marketing targeting, retargeting and all marketing techniques of the last 20 years. We won't lie to ourselves, receiving a relevant targeted ad rather than an ad for senior diapers when you're under 30, that’s better.
However, the question of data ownership has been raised for many years: European regulations on cookies, RGPD, consent on the use of personal data etc. are legal answers to the famous adage "if it's free, you are the product".
The arrival of Web3 is challenging the established principles and reshaping the notions of digital identity. In this article, we will first see what is the digital identity in the Web3, then we will look at the innovation of the tokenized domain names and their utilities to finally present you concrete use cases so that you can, at best, glimpse their utilities.
1. What is digital identity in Web3 ?
1.1 Users wars in Web2
In Web2, the digital identity of a person varies from one site to another. It depends on the platform that owns it: you need an account to log in to Facebook and another one to log in to Twitter, even if the person uses the same email address to create these 2 accounts.
Obviously, you have noticed that when you have created an Instagram account, you have access to the Meta Group's galaxy of services (Facebook, Instagram, Whatsapp but also Oculus) just like Google with Gmail, Drive, Meet etc. However, there is no interoperability between these GAFAMs or even vice versa, these internet giants are fighting a war to impose their identity standard by offering a service facilitating the connection to sites via their own service. In Web2, users use a platform and give access to their personal data in exchange.
Next time, ask yourself why Google or Meta kindly offers the possibility to "sign in with your [Google] or [Meta] account" on a merchant site...
1.2 Web3 and data ownership
Web3 offers a completely different experience, and allows users to have a single entry for their digital identity, through their digital wallet.
Initially, a non-custodial wallet (find the explanation here) allows the holding of crypto-assets and can be used to store and manage personal data in a secure way, thanks to blockchain technology. In general, the Web3 digital identity is seen as a way to enhance the security and privacy of online transactions, by providing a reliable means of authentication and identity verification.
In addition, this digital identity is multiplatform, which means that it allows users to connect to different applications and platforms from a single wallet and choose which data they want to share.
In short, your digital identity belongs to you and you have control over whether it is shared or not!
Big news: the respect of your online security and your privacy is back!
Long live privacy and decentralization!
2. The innovation of Web3 Domain Name System (DNS) how does it works ?
Web3 domain names are non-fungible tokens (NFT) that can be traded on platforms such as Solsea or OpenSea. In addition, Web3 domains have Web3 domain extensions such as .crypto, .dao and .eth.
Once registered on a public blockchain, no one can take away your domain name. (It is important to remember that a DNS is valid for a given period of time that you are buying and that it must be renewed)
To illustrate, a domain name in the web2 universe allows you to replace the IP address of the site you are visiting (e.g. 69.63.176.13), by its name that everyone knows (e.g. Facebook.com): it is smoother to read.
For Web3, it's the same thing, but you give your wallet address a name. You see? The long mixture of numbers and letters that is not easy to read and even less to remember... Well, you replace this sequence of numbers and letters by your name or a nickname! (let's stay "anon" please!)
No need to ask anymore: "does your address start with 0x073B and end with 08f6?" you just have to say "send the transaction to: name.eth" which is then the receiving address.
This innovation removes a significant barrier to entry regarding the ease of use of a crypto address. Indeed, it is easier to interact with a named address to reach a large audience and facilitate the user experience.
Advantage of a decentralized domain name ?
In the world of Web3, having a domain name is proving to be very useful and this usefulness is also bound to increase as technology evolves.
There are several advantages to having a decentralized domain name:
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Independence and autonomy: decentralized domain names do not depend on a central authority for their allocation or management, which makes them more resistant to censorship.
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Security and confidentiality: a DNS, associated with a wallet address, allows to protect data and transactions linked to a domain name in a secure and confidential way.
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Data control: DNS users have control over their domain name and associated information, allowing them to decide how and with whom to share their data.
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Interoperability and openness: Decentralized domain names are compatible with many technologies and protocols, making it easy to integrate and collaborate with other decentralized systems.
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Innovation and experimentation: Decentralized domain names allow for the testing and adoption of alternative approaches to domain name management, which can foster innovation and technology evolution.
Decentralized domain name market
Web3 domain names are an integral part of the new online digital identity. Their exchange rate has evolved exponentially over the last 3 years.
On opensea (the world's leading NFT buying and trading platform) the trading volume of Ethereum Name Service (ENS) domain names surpassed, in September 2022, the most famous NFT collections (BAYC, CloneX or even Moonbirds) to reach 3,762 ETH, or 6.6 million USD volume in one week, just on Opensea.
It is just HUGE ! Especially since ENS is not the only structure offering domain names.
Where to buy a Web3 domain name?
Today, a DNS (Decentralized Name Service) can be found on many decentralized protocols, here are some examples:
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ENS
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Namecoin
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Handshake
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Blockstack
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Unstoppable Domains
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Zilliqa
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Chainlink
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Evmos
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Althea Network.
3. Which companies use decentralized domain names?
Big brands, well aware of the importance of DNS, are positioning themselves and creating their new digital identities through decentralized domain names!
Indeed, to improve their visibility and engagement with their consumers, the big brands we all know are settling down and preparing for the massive adoption of blockchain and web3.
Web3 domain names of big brands are no longer available and this is not insignificant. They have already bought them or reserved them, or even put them up for auction!
Nike, Adidas, Lacoste, Dior, Rolex, TAG Heuer: all of them have already made the choice to turn to the opportunity represented by web3 and the innovation of domain names, sometimes buying a multitude of names.
Nike is one of the actors who invested the most in ENS with its web3 branch RTFKT (pronounced "artefact" in French, "artifact" in English), the company already has 10 ENS and does not hesitate to put the price on it! For example: "dotwoosh.eth", bought 19.72 ETH or about 35 000$ at the time of purchase.
Conclusion :
Privacy, online security, data and digital identity are topics that Web3 has put back on the table for a few years. Decentralized domain names are now more than ever an integral part of the evolution of our digital identity by allowing us, as users, to regain control over our personal data and its distribution.
In addition, Web3 DNS is a great step forward in making interaction with the blockchain more accessible and facilitating the adoption of the decentralized web as it is emerging today.
Companies are becoming more transparent and user-oriented, as is already the case with Nike, Lacoste or Renault.
Tomorrow, individuals, applications and websites will use decentralized domain names to navigate, for a redefined, unique, transparent and more secure digital identity.