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Since its establishment in 2017, Blocktrend has witnessed various political figures proposing blockchain strategies of different scales, all aiming to secure Taiwan's position in the Web3 industry. However, if I were to pick the most promising and feasible proposal among them, the draft for the Taiwan Digital Identity Wallet presented by the Digital Development Department this week is my top choice!

Recently, Blocktrend just discussed the decentralized digital identity RealDID introduced by the Chinese government. While China claims that DID is meant to address password leakage issues, it is, in reality, shaping it into a digital surveillance tool, further restricting people's digital privacy. Before delving into the differences between the Taiwan version of DID – the Digital Identity Wallet – and the Chinese model, people are questioning, "Don't we already have enough digital identities?"

Flaws in the Internet

The internet has profoundly changed the way modern people live, but its design and development are far from perfect, lacking at least two crucial elements – payment and identity – prompting us to patch up the loopholes. The late pioneer of digital identity, Kim Cameron, in the renowned book "Laws of Identity," bluntly pointed out the design flaws of the internet:

The internet was not designed with an identity layer from the beginning. On the internet, we cannot know who or what you are connecting to. This restricts what people can do online and exposes us to significant risks. If not addressed proactively, we will soon face large-scale theft and fraud, gradually eroding the public's trust in the internet.

As early as 2005, Kim Cameron recognized the importance of internet identity and accurately predicted the internet world 20 years later. However, most people may not be aware that the root cause of internet hackers and fraudulent incidents is likely due to the initial lack of proper internet design. Governments around the world constantly warn against falling into the traps of online scams and misinformation, but tackling internet identity is the only way to cut the problem at its roots.

Typing a URL into the browser, and the webpage automatically pops up. The internet connects computers worldwide, but when we are online, we don't know who we are interacting with. The famous 1993 cartoon from The New Yorker, "On the Internet, nobody knows you're a dog," illustrates the problem of the internet lacking an identity mechanism. Otherwise, who would engage in a romantic relationship with a fraud group?

In various online activities, such as purchasing from online auctions or messaging, having an identity is a prerequisite. The internet inherently lacks an identity mechanism, leading websites to require users to register and log in before accessing their services. However, this has given rise to new issues, with each person having an average of 191 passwords on the internet. Instances of password leaks and identity theft have become prevalent, even impacting influential figures like Vitalik Buterin, whose community account was once compromised by hackers.

The development of social logins attempted to address this, but the downside is that our online identities are concentrated in the hands of large corporations. In case an account is blocked, many online services may no longer recognize the individual.

As for government online services, the methods of login are diverse. Sometimes it involves entering a username and password, other times using a card reader with a national ID card, and occasionally just authorizing with a mobile phone. It's understandable that people may feel a bit resistant when governments propose yet another digital identity solution.

However, this week, the Digital Department introduced the Taiwanese version of Decentralized Identity (DID) – the Digital Identity Wallet, which focuses on not issuing new identities. Instead, it adopts a card and wallet approach to construct de facto identity in the digital world.

Establishing a De Facto Identity

According to the Digital Department's article:

"In January 2023, the Digital Development Department officially joined W3C... The Digital Department also began researching and conducting preliminary verification on decentralized identity and proposed the concept of the 'Digital Wallet.' ... The goal of the Digital Wallet is to create a decentralized identity system that aligns with modern digital human rights principles, serving daily digital life. The core functions are authentication (AuthN) and authorization (AuthZ). This project does not issue a centralized digital national identity; instead, it constructs the daily factual identity of citizens (de facto identity) through various credentials issued by different entities (businesses, institutions, groups, and individuals). It aims to achieve 'individual identity autonomy, data authorization self-determination.''

The physical body represents our factual identity in the physical world. Even refugees without any documents still exist and own basic human rights, which cannot be arbitrarily deprived. However, in the digital world, where we lack a physical body, we rely on various companies to provide identity, such as Gmail accounts, Apple IDs, or mobile phone numbers. If someone lacks these, they are essentially non-existent.

While this has become a common practice, when translated back to the physical world, its irrationality becomes evident. Companies have the right to choose their customers. In the physical world, if a business chooses not to engage with you, the impact may not be significant. However, if a social media account is deleted, the individual's existence in the digital world is effectively denied, and their digital footprint is erased. Not doing business turns into a form of silencing, with no benefits for anyone involved.

Since digital identity shouldn't be subject to corporations, should it be under the jurisdiction of governments? The ancient policy of "Enacting Household Registration to Unify the People" during the Warring States period considered citizens as the state's property, a logic that recent Chinese government's RealDID proposal follows. However, as Taiwanese, we understand that the stability of a nation is not guaranteed. A better approach would be to reverse this logic, placing individuals at the core and allowing nationality and corporations to be part of factual identity. Regardless of changes in governments or corporations, the undeniable reality of an individual's existence remains.

The goal of the Digital Wallet is to become people's de facto identity in the digital world, with individuals as the primary entity and other credentials as secondary. This approach is completely opposite to the current logic of the digital world and more closely resembles practices in the physical world.

Similar to real life, where people can keep their national ID cards, employee IDs, credit cards, or loyalty cards in a physical wallet, digital life also requires a wallet for purposes like "proving who you are" and "authorizing others." Individuals or various public and private entities can place their credentials into the Digital Wallet. These credentials may include national ID cards, email accounts, academic certificates for official use, as well as membership cards and event tickets for entertainment purposes.

The Digital Department emphasizes that the Digital Wallet does not issue a centralized digital national identity because what people lack is not another form of identification but a "digital body." The body belongs to nature, while the Digital Wallet is defined as a form of digital public infrastructure. It doesn't belong to any organization, and anyone can use it for free.

In other words, everyone can establish their de facto identity in the digital world through the "Digital Wallet" without creating new accounts or obtaining anyone's approval. This is akin to creating a wallet with MetaMask, where each person can generate multiple Digital Wallets. Furthermore, anyone can be a card issuer, and issuing cards incurs no cost.

However, the significance of identity depends on the cards stored in the wallet. In the future, Blocktrend can also issue cards to members as digital credentials. For example, if the XREX exchange wants to offer special benefits to Blocktrend members, users can present their digital credentials. This is just one simple scenario, and the advantages of digital cards lie in their programmability and the minimization of personal information disclosure.

The Digital Department has outlined three application scenarios, with the most impactful being "Preventing Deepfakes and Digital Fraud" on social platforms. The most challenging issue on social media is the emergence of scams, phishing, and misinformation from fake accounts. At first glance, the solution seems simple—mandate real-name authentication on all platforms. However, this entails digital surveillance. When corporations and governments have complete knowledge of everyone's online activities, would you still dare to be a troll?

Fake accounts are not an insurmountable challenge. Social platforms don't necessarily need to know who everyone is, but they need assurance that the accounts created are by real individuals. This is where factual identity comes into play. For instance, users can present a digital ID card issued by the government. The card doesn't have to reveal personal information, just ensure it is government-issued and prevent duplicate usage. Verified users can display multiple verification badges on their accounts, providing transparency without compromising privacy.

In addition, existing account passwords and natural person certificates can be streamlined into a digital wallet card. Presenting the card only requires fingerprint or facial recognition on a mobile device, making authorization a simple process. Even for the elderly, it is simple. Applying the logic of the physical world, most concerns about potential issues can be effectively addressed.

What if...

The first question that comes to most people's minds is, what if someone loses their digital wallet?

Similar to cryptocurrency wallets, users must independently safeguard their private keys. All challenges faced by cryptocurrency wallets will likely be experienced by digital wallets. The difference is that cryptocurrency wallets store "cash," which is challenging to recover once stolen. On the other hand, digital wallets store credentials, and through a loss and reissuance process, the cards can be easily collected again.

Every day, people lose their digital wallets, and the Digital Department must refer to the current wallet social recovery mechanisms to address this issue. Over time, Taiwan is expected to become the world's most knowledgeable country in understanding Web3 operational logic.

Next, some may worry that using a government-developed digital wallet may raise surveillance concerns. The implementation of the Digital Wallet remains unknown, but this concern is relatively low. The operational logic of the Digital Wallet is entirely different from China's RealDID.

RealDID claims to be a decentralized digital identity but is built on a private chain created by the Chinese government. Not only are individual identities not autonomous, but whenever people log in with RealDID, the Chinese government receives notifications. In contrast, the Digital Department adopts the most standard open collaboration model. Data is not stored by the Republic of China government but in public blockchains or decentralized storage systems like IPFS:

To effectively construct a "composable, cross-border, non-licensed" collaboration model, the mentioned decentralized identity-related credentials can be stored in public blockchains or other decentralized storage systems. These privacy-enhanced credentials can be interoperable and notarized by non-licensed third parties, facilitating cross-border applications like international driving license usage.

It can be said that the Digital Wallet is indeed a project proposed by the Digital Department, and its approach significantly differs from the past practices of other Taiwanese government agencies that preferred creating private blockchains, often ending up as "mosquito chains." The security of the blockchain can withstand public scrutiny, and the Digital Department does not limit itself but encourages global developers to take the project home for modification from the very first day:

This project will strive to create a Digital Wallet suitable for developers worldwide to fork. Especially for mobile service providers, browser developers, and government services worldwide, effective use of SDKs and APIs will enable Taiwan-developed Digital Wallets to have cross-border applications.

For instance, in the future, Gitcoin Passport could also integrate with Taiwan's Digital Wallet, verifying users as real individuals through card recognition and assigning certain trust scores. As more developers globally adopt Digital Wallets, it will no longer be Taiwan's digital public infrastructure alone but a globally exported public infrastructure developed by Taiwan. I really like the last paragraph in the post:

When we are no longer constrained by large platforms or specific companies, everyone can "liberate" themselves—effectively controlling their own status and autonomously deciding on service usage. This enables the generation of grassroots digital actions, empowering oneself, and fostering collaborative contributions to society.

This blockchain strategy is for Taiwan!

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