The Blockchain and Digital Identity Part 2

How Blockchain Could Change The Management of Identities and Passwords and Prevent Occupational Fraud.  Stats and Facts. Blockchain as a solution.


There are several reasons why all of these issues occur. One of the reasons is that many people in the Western countries today spend a significant percentage of their work time and leisure time in front of a computer. The connection here is very simple and obvious: the more time you are spending doing something, the higher the probability of mistakes happening. Checking email once a week on a personal computer is very different from checking email several times a day and using multiple devices, including public computers and smartphones that are small enough to be easy to lose or forget about on the go.

According to estimates, the average person in the United States in 2016 has spent over 10 hours a day in front of a screen, including smartphones, DVD players, personal computers, video games, TVs, and other devices. According to the Nielsen report, the exact number is 10 hours and 39 minutes and the number is still growing year-to-year (source: Most of the sites and resources that people access, be it at work or during their personal time, from Facebook to Google Drive to corporate networks, require just one password and oftentimes passwords that people use are very easy to guess and pick. According to an article in the Huffington Post, the top three most popular passwords in 2016 were 123456, 123456789, and qwerty (source: ). The data comes from password management company Keeper Security, which has analyzed over 10 million passwords. “123456” has been the password of choice in 17% of instances. The word “password” is also in the top 10 of most popular passwords. Other studies show that people use one of the most popular ten thousand passwords about 99% of the time.

Most issues with passwords and identities occur because of human mistakes and weaknesses, such as leaving personal pages open on public computers, writing passwords on pieces of paper and then losing the paper or having strangers see the paper, or even simply giving sensitive information to cyber attackers.

In 2011, attackers gained access to 77 million passwords of Sony PlayStation users. In 2012, they stole over 400,000 passwords from email address on the Yahoo platform. Even Apple iCloud has fallen a victim of cyber attackers, which led to the famous celebrity photo leaks of 2014 and attackers releasing photos of Jennifer Lawrence and Kate Upton.

All of this has led to the increase in popularity of password management software such as LastPass, Roboform and 1Password, which allows users to quickly generate secure passwords and pre-fills the forms and fields without users having to remember complex passwords. However, this approach also has its flaws, the main of which is the existence of one master password that cyber attackers can use to gain access to all other passwords of a user. Most software providers also store the data on centralized servers, meaning that during a data breach hackers can gain access to emails, encrypted passwords, and unencrypted password hints.

Recently, many software platforms have been offering users two-factor authentication (2FA), but research has shown that even 2FA can be hacked using social engineering and gaining access to phone data in cases when users receive their 2FA passwords via texts.


Blockchain breakthrough

The first reason why blockchain technology can solve many of the issues with occupational fraud and storage of identities is that records on a blockchain are immutable. This means that a scenario in which hackers gain access to a blockchain network and quietly start changing the data on the network is not possible.

In essence, a blockchain is a ledger in which blocks are similar to pages of a ledger. Once a page (or a block) becomes a part of a ledger (or a blockchain), changing the information that it contains is not possible.

For example, the Bitcoin network protects the blocks with proof-of-work algorithm and the rule of the longest chain. Proof of work is a way to run all the data in a block of the Bitcoin blockchain through a cryptography algorithm in a way that seals the data permanently. Miners on the Bitcoin network get rewards for creating blocks of the Bitcoin blockchain, which is one of the reasons why they are interested in preserving the integrity of the network. The longest chain rule means that if somebody were to try and create a new version of the blockchain, the blockchain would recognize the longer version as valid. Because of this, even if someone were to change just one digit in the data about just one Bitcoin transaction that has occurred on the network since its launch in 2009, the network would simply reject the block that contains the edited transaction.

The Bitcoin blockchain is also decentralized, meaning that there are thousands of computers all around the world that have a copy of the full Bitcoin blockchain and even if someone were to change several copies, the network would be able to restore itself to the original condition. A computer on a blockchain network, including the Bitcoin network, that contains a full copy of the network’s blockchain is called a node. You can see a list of all Bitcoin blockchain nodes that are online and their location in real time as you are reading this article by visiting