Protecting one’s data and personal information is a major priority in the digital world, especially after the exposés of major tech giants conducting undisclosed consumer data collection and sales in recent years. On top of this, identity data theft has been rampant over the past few decades, with a 195% increase in companies reporting illegitimate access to personal data in 2019 from previous years.

However, France-based digital identity solution incubator XSL Labs has been working for the past two years to decrease this number through the use of blockchain. Prior to the company’s creation in 2018, the two founders of the company, Goerges Tresignies and Ludovic Ryckelynck, realized that no large-scale French project of blockchain-powered decentralized identity solutions existed.

In response, they developed an ecosystem built around a Decentralized Identifier (DID) called Secure Digital Identity (SDI). This solution involves a system of decentralized applications built around the SDI to control and access many other services, as well as a utility token (named the SYL token) that is used to carry out transactions within the ecosystem.

Blockchain for Decentralized Identity

Currently, the majority of digital identity management is hosted through a large online service provider that also acts as an identity provider. When companies and online service providers need to verify a user’s identity, they often choose to delegate this job to social media giants, such as by having a user connect to a service using their Facebook or Gmail account.

It is possible, though, to use public blockchain to transition identity management toward a decentralized architecture. This is what XSL Labs is working to achieve. Essentially, crypto-assets are assigned referring to a public address, based on a private key kept by the users in their wallet. For this to work, users must create their own decentralized identity, which is a unique identifier to the creator of the DID that can operate without relying upon a central authority.

This DID can be linked to one or more cryptographic keys that the owner has exclusive control over. The DID can then be used to create a profile of the user available on a public blockchain—a DID Document—which does not contain any personal information and is instead used to add new types of data to the DID Document.

One of XSL Labs’s key projects is the development of this DID document, which they refer to as a Secure Digital Identifier (SDI). Seen as the passport of the internet of value, XSL Labs is using the decentralized storage aspects of blockchain as well as a Verifiable Credentials system that can be issued and updated by third parties (institutions, companies, KYC issuers) as the foundation for the SDI. Essentially, the SDI will function as a set of encrypted personal data that only the user can read, while also maintaining usability in the XSL Labs ecosystem and with other web 3.0 systems.

This project has three phases of development. First, XSL Labs will use the Ethereum blockchain, and then transfer the solution to the Flare network in Phase 2 to reduce transaction costs and provide greater scalability. In the third phase, when the network is deemed “perfectly scalable,” XSL Labs will develop it on its own blockchain called Pulsar.

The Benefits of the SDI

Centralized servers for consumer data, which were the status quo in the digital world for years, can be looked at as a huge vault containing the deposits of many customers and users. If a thief is able to elude the security system of this vault, they then can have instant access to everybody’s deposits all at once. However, if each person had a personal private safe in their house, a thief would have a much more difficult time stealing the same amount of money.

In the same way, the use of centralized servers means that brute force attacks from hackers can give them unauthorized access to the personal information and data of a large pool of users all at once. If personal data storage and digital identity are decentralized, a hacker would be forced to hack SDIs one at a time, making the act of personal data theft an extremely low-benefit, high-cost task.

Therefore, the use of SDIs will significantly improve the security of personal data in a few ways. First, it will greatly reduce the influence of tech giants by replacing their centralized and interoperable authentication systems with an identifier that the user has complete control over.

On top of this, XSL’s SDI solution functions on the “Zero-Knowledge Proof” method, which allows the user to freely choose which data they want to share or keep confidential. This limitation of data dispersal is a major part of restoring a user’s sovereignty over their own identity, reflecting self-sovereign identity principles.

The Integration of the Solution

In order to allow for the SDI solution to be easily integrated into decentralized apps and existing services, XSL Labs has developed a decentralized app, the ONE application, to serve as a gateway to the XSL Labs ecosystem. This will enable the interoperability of all services that use the SDI, which can be applied by nearly any service that requires identity verification, whether that’s booking travel tickets or ordering food for delivery. In all of these use cases, the SDI can effectively eliminate all third parties that may potentially exercise control over users. 

The ONE application will serve as the gateway to all of XSL Labs’ solutions. Source: XSL Labs Whitepaper

The app includes an SDI control panel, a history of user identity data use, a wallet to manage SYL tokens, as well as a gateway to XSL Labs’s decentralized app store, the SYL Library. All data shared through the ONE application will be stored and encrypted on a blockchain to provide optimal data protection to the user.

Currently, XSL Labs is researching use cases for the SYL token aside from its use as the SDI ecosystem’s native utility token. Soon, XSL Labs is slated to finalize its ICO phase, following which the SYL token will be issued. XSL Labs solutions will also enter its developmental stages and will be made available to the public.

ABOUT THE WRITER

Serena He is a Tech Innovation Fellow from the University of Southern California who is interested in AI and the intersection of design and technology. She enjoys covering news across the digital identity and tech space.

Contact Serena He at serena@identityreview.com.

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