Your Digital Identity is Your Money
Do you know how your grandfather or grandmother used to withdraw money from their bank accounts? They used to access the bank facilities in a traditional way.
They used to visit their particular bank branch and submit withdrawal slips for withdrawing money. The bank staff used to take their bank passbooks and the filled withdrawal slips. Then, the bank staff used to take out the physical ledger books from the safe cabinets, verified the signature and available balance, and passed over the slips to the teller counter for disbursing currency notes.
In a bank, the disbursal of money is done only after verifying the account holder's signature. If the signature doesn’t match, the bank authority will deny the withdrawal of cash. Thus, personal identity verification and KYC are mandatory for availing of the banks' financial services.
The facility of withdrawal at the physical office of a bank branch is still possible. The banking systems improved the facility by providing automatic teller machines (ATMs) and online banking. The account holders can now withdraw money from an ATM using a physical card with the identity information of the account holders embedded, which is called a debit card.
Thus, the banking facility can now verify the account holders' personal identity via machine verification of debit cards on ATMs, and hand-held card readers called POS (point-of-sale) machines used by banks and merchants. It has now incorporated a second security layer of identity verification, such as PINs and codes sent to mobile phones. It is commonly known as two-factor authentication.
You can now execute online financial transactions by logging into your account on the bank portal. The banking platform uses advanced authentication techniques to verify your digital identity with your username and secret authentication credentials. In most banks, the usernames for online accounts are also secret, which is not known to even the bank staff.
If the secret credentials of your online bank accounts are compromised, lost, stolen, or hacked, the financial asset in your bank account is also compromised, lost, stolen, or hacked.
Each user has a verified account on the cryptocurrency exchanges that access the cryptocurrency assets in the wallet. A verified account is your digital identity at a particular cryptocurrency exchange that provides your custodial cryptocurrency wallets.
Your digital identity validates your ownership of your assets via different authentication credentials, such as username, password, and private keys.
The centralized cryptocurrency exchanges are like centralized fiat banks that provide usernames and passwords that you can change, and a KYC to execute trading and payouts. The decentralized exchanges provide you with a pair of keys, namely the public key and the private key. The public key is used to send cryptocurrency data assets.
The private key is vital because it secures the ownership of the cryptocurrencies in the wallet. All the associated cryptocurrency data assets are lost if the private key is lost. As a safety feature, the cryptocurrency wallet system initially provides with mnemonic phrase to recover a cryptocurrency wallet.
A huge amount of cryptocurrency has been lost due to the loss of private keys. The lost cryptocurrencies due to lost private keys are non-recoverable and are lost for good.
The digital assets or money of a person are directly linked with their digital identity through several secret credentials, such as username, password, public key, and private keys, and a KYC to permit the execution of the financial transactions.
Your digital identity is as valuable as your digital assets, including fiat currency and cryptocurrency.
If your digital identity is stolen, compromised, lost, or hacked, all your fiat and cryptocurrency assets are also stolen, compromised, lost, or hacked.
How do you manage your digital identity?
I belong to Science, Technology, Engineering, and Mathematics (STEM). I am also interested in "Arts," so I now my field becomes STEAM - Science, Technology, Engineering, Arts, and Mathematics.
I develop password security and cybersecurity solutions relevant to cryptocurrencies, blockchain, and other block-less distributed ledgers.
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Unity (Debesh Choudhury)
Text Copyright © 2022 Debesh Choudhury — All Rights Reserved
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Disclaimer: All texts are mine and original. Any similarity and resemblance to any other content are purely accidental. The article is not advice for life, career, business, or investment. Do your research before adopting any options.
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April 25, 2022.