How Blockchain Will Enable the Creation of Fully Digital Identities and Marketplaces

By Sergey Ponomarev, SONM CEO

The Internet and the blockchain are often compared as two technologies that have disrupted much of global finance and economics. That is not the only similarity that these technologies share; in fact, blockchain can be considered, as proposed by venture capital investor Tim Draper, a new Internet.

The Internet is a centralized system involving many actors, with no unified consensus mechanism. As a result, there are many different systems and components that do not communicate; for instance, one’s identity on Github as compared to his identity on LinkedIn may be drastically different.

The basic structure of the blockchain is its address or public key: the very mechanism that allows users to transfer funds and work with digital agreements called smart contracts. Similarly, the Internet runs on a server with a public IP address. Since no public information about this address exists, it is merely a point to which one can connect and execute certain actions.

The main area in which blockchain and the Internet differ is in the number of services they require to operate. For instance, a web site needs a domain name, which is then assigned to the DNS and indexed in a search engine; an SSL certificate for the security of users; and functional content that is used directly.

On the blockchain, any person or company with a profile rating reflecting some digital essence of trust, including the history of the transactions of the user — similar to a Google search history log. In this record, users can link to the necessary “certificates,” such as pages on Github, LinkedIn, and Facebook similar to how SSL certificates are linked on websites. Furthermore, in new Ethereum update, called Byzantium, such links will be very cheap, even cheaper than purchasing web domains.

Each profile, as a smart contract, will be able to contain all user information in one economic unit, make deals with other profiles, arbitrage and be arbitraged, and most importantly, connect to different rating networks. Rating networks will be a blockchain representation of an organization unit where we have some score based on different factors, including job and academic performance.

Simply put, all users in the network will be able to see how successful you are.

Of course, any company or organization unit will have rating networks too, such as rating various marketplaces or creating a political legitimacy rating. Such updates will play a pivotal role in making our democratic societies more open, trustworthy, and transparent.

Blockchain is in its early stages of development. As much as it’s been compared to the Internet, one of its primary advantages is that it represents an opportunity to start from scratch: to design anything we want and develop our own standards. By letting users work on their profiles within the blockchain network, it gives them the chance to create a full-fledged economic unit, or “digital passport.” Each user, whether this is a company or an individual, will now be able to carry out transactions between other individuals.

In addition, the rating and history of their profile will be much more informative and more trusted, but also immutable. This final rating will be more reliable than a work reference, tax filing, or credit history, chiefly because it will be impossible to forge. This will offer new projects the ability to forge the path of their own destiny in the age of the digital economy.

While the advent of the Internet offered the possibility of increased connectivity, blockchain has the potential to take this to the next step by providing the world with a way to become fully digital. When transactions and marketplaces have become completely digitized, the creation of fully decentralized and trustless societies becomes a very real possibility.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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