Why decentralized identifiers matter in NFTs and Web3

October 20, 2022
Decentralized Identities have finally arrived in NMKR Studio
Decentralized Identities have finally arrived in NMKR Studio

We are glad to announce that in collaboration with IAMX, NMKR has successfully deployed an NFT Identity Metadata Standard, that allows creators to issue and attach their digital identities to NFTs.

Let's say you are an online seller, and you need a way for your customers to know that you are who you say you are. But what if you don't have a physical store or office that they can visit? And what if you don't want to give your personal information to a central entity like a bank or government?

This is where IAMX and DIDs come in. With IAMX, you can prove your identity without needing to give your personal information to anyone. IAMX is a Self-Sovereign Identity (SSI) solution that leverages DID and blockchain technology, empowering users with the ability to hold and manage their own identity data without the need for a centralized authority. And because DIDs are decentralized, your IAMX identity can't be censored or revoked by any central authority making them the perfect solution for NFTs, which are also decentralized and censorship-resistant. Moreover, IAMX and DIDs are great tools to fight fraudsters that engage in malicious activities such as identity theft.

The era of your identity serving as a product, controlled and capitalized by corporations, is coming to an end. It is time for you to take ownership of your identity. IAMX adds the identity layer to the internet, making it possible for people and businesses to identify themselves in a decentralized environment.” said Tim Brückmann, CMO and Co-Founder at IAMX.

What Charles Hoskinson, the Founder of IOG said about DIDs

In a recent Twitter space between Patrick Tobler and Charles Hoskinson, Hoskinson stressed the importance of DIDs, saying: "NFTs can potentially verify identity for supply chains. In the future, people could be required to prove a lot of things in the supply chain, such as ESG (Environmental, Social, and Governance). DIDs can provide some sort of agency through NFTs, and that's one of the focus areas for IO."

On the topic of integrating DIDs with NFTs, Hoskinson said:

"Another area IO have been looking into is how they can integrate a DID into a dApp, a transaction, and a user. That way, an issuer, an operator, and a user can decide if they prefer to be regulated. To prove the value of an NFT associated with a scarce object such as Jimi Hendrix's guitar, integrating DIDs (Decentralized Identifiers) have to be integrated to facilitate the chain of custody"

Due to regulatory constraints in certain geographies, DID will be an absolute game changer in the space in terms of KYC/AML compliance in the context of Web3. Here is what Hoskinson had to say on this topic: "Due to regulatory grey areas in the US, many crypto projects abandoned the US altogether. Having a DID doing preliminary KYC on people and verifying them can be essential to solving issues in cases where you need to avoid making offerings such as drops or ISPOs to people with US-based domicile falling under the US jurisdiction"

Below we are listing some questions along with our answers that might come up in your mind on the topic of DIDs.

What are DIDs, and SSI, and what problem do they solve?

DIDs are a W3C standard and a new type of identifier that enables decentralized digital identity. According to the W3C definition, a DID refers to any identifier that may be solely controlled by the owner, without the need for any central authority. IAMX takes this further, providing DIDs that are globally unique, resolvable, and cryptographically verifiable, for storage of verifiable credential container sets that are fully in control of the holder. This means that other parties can discover information related to a DID, but the controller can prove control over it without needing permission from any centralized platform like an NFT Marketplace. 

SSI is an identity management system for proving who you are, NFTs are for proving what you own, and DIDs are the foundational enablers of SSI, as they provide a decentralized way to identify entities on the Web. However, DIDs alone are not enough to create a fully-fledged SSI ecosystem - they need to be combined with verifiable credentials, such as official social media accounts or websites, to enable individuals and organizations to prove their identity in a decentralized way.

This is why NMKR and IAMX are such a perfect match - DIDs and NFTs are both decentralized, so they can work together to create a truly open and trustless ecosystem. And because NFTs can be used to represent anything of value, they’re the perfect way to store and manage your digital identity.

Why are we enabling DIDs for NFT projects?

Most of the platforms like marketplaces manually assess these projects on a case-by-case basis for verification, which is not only time-consuming but also not scalable, as cross-platform verification has not been feasible for many because it demands too much work. This requires NFT project creators to go through similar rounds on different platforms, often leaving them frustrated. This is where DIDs come in. With a DID, project creators can prove their identity in a decentralized way, without needing to fill out personal information every time and then wait for manual verification.

NMKR has been working tirelessly to prevent fraud and safeguard authenticity of NFT projects. To achieve this, among several steps, we’ve deployed DIDs with IAMX - firstly, it protects artists so no one can duplicate their work and falsely sell them as original; secondly, buyers are made aware that what they're buying from legitimate projects and thirdly a marketplace becomes safer for everyone involved including both sellers and buyers. And because no trusted party is involved, it pushes decentralization to new heights.

"We're proud to enable DIDs for our makers and creators. This is a crucial step in the NFT space, and we believe it will pave the way for more mainstream adoption of NFTs. Real-world use cases powered by identity, ownership, and provenance will start to emerge, and this is just the beginning" said Patrick Tobler, Founder & CEO of NMKR.

Can you give an example of DID?

Let's say Paris Hilton wants to launch her NFT collection. With a DID, she can create an identifier that is controlled by her and her only and not by a marketplace. This means that if she connects data points linked to her Twitter, Instagram, email, or KYC to a DID, she can prove that it’s her without needing to go through a centralized platform verification process.

Are DIDs truly decentralized?

Yes, because DIDs are stored on IPFS (InterPlanetary File System) meaning they’re immutable and impossible to delete. The NFT associated with a specific DID will live on-chain. For many Web3 applications storing data that is authenticated and encrypted is key to their function. DIDs also have another big advantage: They’re future proof. As technology evolves, so do DIDs. So even if a particular platform goes away, your DID will still work on other platforms that support DIDs.

Final thoughts

The team at NMKR is truly overjoyed to see the impact NMKR Studio is having in the Cardano space. Since we firmly commit ourselves daily to creating Web3 infrastructure to empower real-world utility, the NMKR team is confident that DIDs in blockchain will usher us into Web3 trajectory even faster than before, advancing our mission to make the world a fairer place for everyone.

There are endless use cases for DIDs. Not only can DIDs be used for KYC (Know Your Customer) but also for identity documents needed for Air travel or for proving certifications needed to provide certain services, as in the healthcare field. They offer a unique and individual experience that is secure, private, fast, and convenient.

If you are an NFT project creator, we encourage you to look into using DIDs. And if you are an NFT marketplace, we urge you to consider supporting DIDs so that your users can benefit from the advantages they offer. We believe that by working together, we can create a more open and trustless ecosystem for everyone.

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