The Blockchain and Digital Identity Part 3

How Blockchain Could Change The Management of Identities and Passwords and Prevent Occupational Fraud. Immutability of Blockchain Records.


Most of the issues with tampered identities and occupational fraud are possible because people think that they will not get caught. Typically, paperwork or accountability systems represent a mess of separate systems and those who perpetuate fraud think that if they make some changes to one of the systems, the changes will go unnoticed and with time nobody will even be able to find the data or the edits that have occurred in the past.

Very few people would engage in illegal activities if they were 100% convinced that they would get caught. Thinking that they would be able to get away with it is a large part of the problem.

The blockchain technology solves this problem with immutability of the records. If an organization is running its documentation, including financials and internal correspondence, on a blockchain network, all the data becomes a part of the network and changing it would be impossible. On the other hand, it would provide the organization with an immutable searchable ledger and should a problem occur, the investigators could search the ledger and find out exactly what happened and when. Tampering with emails and records would simply be impossible.


Bitcoin is just one example of a blockchain application. To participate in Bitcoin transactions on the network, you would need a wallet and a pair of keys: a private key and a public key.

A Bitcoin wallet serves as a place to store information about Bitcoins and also as a tool to receive and send funds. On a different kind of blockchain network, such as wallet could be a place to store all types of information, from emails to information about identities, yet the information could still be cryptographically protected by a pair of private and public keys.

The creator of the Bitcoin network is Satoshi Nakamoto. After designing the network, he has made the software code for the network open-source, which means that anyone could download the code, inspect it, edit it, and use it for whatever purpose, including changing the type of data from the financial to something else. Bitcoin being open-source software is one of the reasons why there are so many cryptocurrencies currently trading on various exchanges. Some of them simply took Nakamoto’s code and made improvements to the code, without having to design a network from scratch in the way Nakamoto did.

A private key on a blockchain network is a long randomly generated string of numbers and letters. Here is an example of a Bitcoin private key: E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233BC33262. A public key on a blockchain network is mathematically connected to the private key, but it is impossible to recreate the private key knowing the public key because of the strong cryptography security of blockchain networks.

Blockchain networks enhance user security in a number of other ways, too. In addition to the pair of private and public keys, there is also a wallet address. Many people confuse public keys with wallet addresses. A public key is not the same as a wallet address. A user on the Bitcoin network and many other blockchain networks can have an infinite number of wallet addresses. Generating an address is free, meaning that each transaction can have its own address, which adds an extra layer of protection to the blockchain transactions.

Instead of the information about financial transactions, wallet applications can also store credentials that would serve as proof as identity.


For example, in 2017, the State of Illinois entered into a partnership with a company called Evernym. The goal of the partnership is to provide newborns in the State of Illinois with digital birth certificates or, as Evernym calls them, self-sovereign identities (SSI).

SSI is a concept that may seem strange and complex, but in reality it is not. When you are being born, your parents have given you an identity. This identity comes in the form of the first name that your parents have chosen and the last name. Then, your parents have registered this identity with the government. Your birth certificate, social security number, and other government documents are a result of this registration. Your identity became self-sovereign, meaning that you gained full ownership and control of it, when you obtained full legal independence, also known as the age of majority. In the United States, the age of majority is eighteen. You can see the age of majority in different countries by visiting this Wikipedia article: