The role of decentralized digital identities in the metaverse

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    Advice notes from Kuppinger Kohl Analyst Predict how decentralized, self-sovereign identities overlap with the metaverse. The two new technologies may not be enterprise-ready or scalable today, but they will be in the near future.

    Our analysis shows that businesses need to overcome barriers to leveraging digital identity in the metaverse now to take advantage of business opportunities later.

    Companies need to prepare for a period of expansion of avatars and digital identities

    Meta first announced Pixel Codec Avatar (PiCA) in 2021. Conference on Computer Vision and Pattern Recognition. PiCA is a 3D video realistic avatar that reconstructs an individual’s face for use cases such as telecommunications in the metaverse. The company also recently partnered with Zoom to advance collaborative virtual reality workplaces.

    This model is efficient enough to enable multi-person communication, but needs further development to become mainstream. Meta plans to improve performance and scale over the next year.

    KuppingerCole analyst Mike Neuenschwander argues that decentralized systems will become the default for metaverse and identity AI use cases. Blockchain allows individuals to own their digital identity and control their data. Centralized approaches to authentication, identity, and security do not scale like decentralized approaches.

    However, like PiCA, decentralized IDs currently face scalability issues as their decentralized nature requires high-bandwidth, low-latency connections. It also faces increased execution time.

    Additionally, privacy, security, and interoperability concerns make it difficult for users, vendors, businesses, and governments to reach agreement on a shared, decentralized digital identity framework.

    Hypertrends and the future of enterprise IT

    Several hypertrends are emerging that are changing the demands of enterprise IT.

    Businesses are becoming more hyper-connected, especially as AI and other advances move computing operations closer to the edge of the network. For example, users can enter biometrics to onboard into financial services apps.

    Businesses are also growing to become more highly integrated and rely on trusted partnerships and guest workers to support their organizations.

    Companies are developing highly personalized products and experiences. Manufacturers are using virtual reality to help consumers customize products such as cars, clothing, and furniture. Finally, hyper-disintermediation occurs more frequently as customers act through non-human avatars. The number of malicious bots will continue to increase.

    All these trends are driving the demand for decentralized and verifiable identities.

    Overcoming setbacks to decentralized digital identity in the metaverse

    To leverage digital identity at any scale, stakeholders must overcome obstacles such as environmental and financial costs, integration, compliance, and liability.

    Using a proof-of-stake consensus mechanism is more energy efficient than the proof-of-work system used by cryptocurrencies such as Bitcoin. Layer 2 scaling allows you to increase transaction throughput while reducing computational requirements and energy costs.

    While blockchain can help prove ownership of avatars, ledgers must avoid becoming identity providers where all of a person’s identity is centralized in a single ledger.

    Businesses should take note of blockchain and other emerging technologies and prepare for implementation. Vendors should focus on mitigating the barriers that may exist for businesses to adopt these technologies.

    An analysis by DXC consultants late last year revealed that digital identity and authentication is a major barrier to Metaverse adoption, putting new developments on hold.

    Article topics

    Decentralized Identity | Digital Identity | Enterprise | Kuppinger Kohl | Metaverse | Self-Sovereign Identity


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