A group of Bitcoiners explore why having decentralized identity may be just as important as decentralized money.

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In this episode of Bitcoin Spaces Live, hosts Christian Keroles (@ck_snarks) and P (@phjlljp) are joined by Daniel B (@csuwildcat), Shinobi (@brian_trollz), and Level39 (@level39) to discuss the future of decentralized identity. They explore the different decentralized identity projects happening at Microsoft and Square, ION (a layer 2 built on top of Bitcoin), why decentralized identity is just as important as decentralized money, the future of lightning and DID, and much more. 

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[00:00:08] CK: Daniel, you have been a huge advocate for decentralized identity, especially using Bitcoin. You have pushed this idea forward in the public, as well as at different organizations. Most recently, Microsoft. Obviously, there's some changes there. The mission continues. You had some big news earlier this week that you're realigning with Square, which is obviously a Bitcoin-forward company. I guess, let's just jump into decentralized identity, your role within decentralized identity and maybe talking about what's happening with decentralized identity at Square and what is going to happen with decentralized identity at Microsoft?

[00:00:51] DB: Yeah, sure. I got into decentralized identity a while back, first that Mozilla, around 2012, just the concepts around decentralized apps. I don't mean decentralized apps in the way that the strange blockchain type things. It means actual decentralized applications that don't have an application server in the middle of them. In that process, found out, identity is pretty critical, right? If your account IDs are some companies that's running the app and your data is stored with the company servers, you can't really have a centralized app to see if – figure that out.

[00:01:20] P: I’m sorry. Can you define what decentralized identity is, versus a centralized identity?

[00:01:27] DB: Yeah. Identity is all-encompassing concept. There's a few things within it. Your identity, I define it anyway, as everything that defines you. It's all your communications, your thoughts, your beliefs, things you write down, data you put into apps any. Anything that's really tied to you, your fingerprint on the digital world, if we're talking about digital identity is your identity.

Within your identity, you have a single identity that encompasses everything. You might have many personas, ways you want to reflect that identity out to people. You might have a very public one, like your Twitter profile would be a very good example of a public reflection of a large portion of your public identity. Then you may have very private ones that you keep with groups of friends, or certain counterparties that you don't let as much of that data that defines your identity. That's the definitive definition.

[00:02:13] P: Got it. You're saying, the identity is the representation of truly who the individual is, or the entity. Then there are these personas, which are basically thin slices of that, that one might present to different audiences.

[00:02:28] DB: Yeah, absolutely. Yeah. The goal there is obviously, to make sure that the people aren't disclosing any more than they want to. I mean, now you get in context and that thing. Where decentralizing comes in. The difference between centralized and decentralized identity is in centralized identity, what we currently have today, your identifiers, which are the ways you reflect out personas typically, right? You give someone an identifier that could be your Twitter handles, and a very public identifier. Those are typically owned by companies. That has its consequences. Obviously, we see that today in the public sphere, when you’re an identifier, which is the way that everyone recognizes you, that's what really identifiers are. The way people recognize you in the world.

If you didn't have at least a pseudo-anonymous identifiers, no one would be able to know a provenance of you at the time. If I just tweeted from a random identifier every single time, the tweets might be great. Maybe they're banging, but people are like, “Oh, I didn't even know this. It's just tweets coming out of nowhere. I guess, I'll just read and consume this amorphously.” It doesn't accrue to any identity. That's why people use things like, Twitter profiles. The issue is your data is stored with a single company and your identifiers can be cut off, whether it's Facebook, or others.

I mean, that's an issue, right? Because you don't really own that big chunk of your life, which is maybe your public identity. It's very hard to even own, private or semi-private IDs as well. That's an issue. Decentralized entity sets up to solve those things with a couple of key standards; ones that DID spec the decentralized and FR spec that's going through WTC right now, facing some opposition from some entities, obviously large silo entities that have best interest in not having the cops. The other is this personal data store aspect.

Tying it into the journey, the personal data store aspect is like what I was most interested in 2012, which was how do we decentralize apps? Back in Mozilla days, it was Firefox handshake was the going term that we were using internally. That didn't get funded, but I ended up leaving Mozilla to go to Microsoft, because they were after talking them into it, they're willing to pursue decentralized identity. Strange bedfellows, you might think.

Yeah, it's weird in the sense that Microsoft, people like to be down on them. I get it. I'm not a 100% aligned, obviously, anywhere close with some of the things they do. In the identity sphere, they're not what you would think. Because they don't make their money in the same ways that the make the Googles and the Facebooks of the world do. They make most of their money from providing what some of us might think of as a little bit enterprisey tools and services to companies.

[00:04:57] P: I just want to jump back for one second and re-articulate what you just said, because I think for a lot of people in the audience, or for a number of them, anyway, the idea of decentralized identity is not something that they may be thinking about. Tell me if you agree with this, that basically, where – just as we think of Bitcoin as being something that is so important, because it decentralizes and add censorship resistance to money and sound money, having a decentralized identity, that is to say, a decentralized system, by which you can uniquely identify yourself to other people is critically important.

If you understand Bitcoin and the reason for decentralization sound money, one can just shift that over to decentralization of identity and being able to uniquely say that you are you, via a variety of specific factors.

[00:05:42] DB: Yeah. It's incredibly important. A lot of people have this misconception like, “Oh, identity is bad.” Identity is bad, and it totally depends on how you use it. You want identity. People want to know their counterparties and they want to know, hey. Even in Bitcoin, you have identity. You the pseudo anonymous addresses. If someone says, “Oh, pay me $5 in Bitcoin.” You don't say, “Oh, let me just send Bitcoin to any old address. I don't need to know your identity.” Because remember, addresses are pseudo-anonymous identifiers.

We like identity. Identity helps reputation. If I can refer to someone by an identifier and say, “Hey, do you trust this person, Bob? I'm trying to do some business with this person. Do you trust them?” You want an anchor of identity. The negative uses of identity are really the ones that get people up, their hackles up. Don't throw the baby out with the bath water. Identity is important. If us owning our Twitter accounts and our other social accounts is really important, and you've seen this.

Luke Dashjr just came back. He got out of Twitter jail. It's cool. Maybe he should have never been in Twitter jail, because maybe there shouldn't be a jail for people's digital identity. I don't know. It's just my own personal view. I don't think companies should be able to snap you out of existence. That's what DIDs prevent. If we had a system of decentralized identity, and let's just say, you were using it in this particular instance for public identifier, like you would a Twitter handle, you would publish tweets from your personal data store, or something of that nature. People would come to your identifier and then they would find your personal data store, which the data exists with you and you control it, and they would pull.

In that way, it doesn't really matter what client someone's using. There's no person in the sky to hit a button to say your ID doesn't exist, or your tweets don't exist, or your content doesn't exist. Now, I understand the position Twitter's in, now that I happen to work for one of these two companies, obviously. It's just, I want to be a little sensitive here. They have regulations and they've got norms and social stuff that goes on, and they have their own policies. That's okay. What decentralized identity is makes that even better in the sense that every business can say, “I do or do not want to do business with these IDs.”

What it removes from their hands, which they should have never had, but it's not their fault, because we never had any other way to do it, is the intertwining of the actual identity with their particular service. That's a separation of church and state that we need to have. We just don't today.

[00:07:58] S: Yeah. That is so important in an age where the town square is digital. Everybody isn't just meeting up in the middle of town, where they all know each other and they can all talk. It's all happening online. When you remove that identity from somebody, you literally exclude them from that town square, for the equivalent of it these days.

[00:08:21] DB: Yeah, it's exactly right. I don't think that this is about getting down on any one company, and they all have these policies. Every company reflects different cultures and stuff like that. The cool thing about DIDs and personal data stores, is they allow you to go pick up any wallet, or top-level application level client that you want. Then that can provide you whatever experience you're expecting. You could go potentially in the future, download a completely open source client that has no restrictions on whose IDs it talks to. It's not going to obey any blocklists, or anything like that. It's just going to consume content.

It'll be up to you how you want to shape your own traffic. I think, that's an incredibly powerful thing. It doesn't remove from people the ability to block people, but they do it on their own. They do it on their client. Instead of always trying to advocate for someone else in the sky to do it, you're just empowered more so to filter on your own, which I think is the appropriate boundary.

[00:09:16] CK: Daniel, talk a little bit more about what you were doing at Microsoft, where things left off there and are they still pursuing decentralized ID without you? Then, maybe we can jump into what's happening at Square?

[00:09:28] DB: Yeah. Microsoft, their products are marching towards this public launch. I can't speak for their timelines anymore, but I would expect it would happen next year sometime. Their use of decentralized identity, really is very close to their current business. For folks who don't know their current business in the identity space, it's called Azure Active Directory. It’s the biggest product. It's a multi-billion-dollar business for Microsoft. Really, what it is like, account management for companies. They have to do roles and accounts within their own company to FA all those things. It's all rolled up in one big solution.

The vast majority, almost 95% of the Fortune 10,000 use Azure Active Directory. Pretty much any company’s anyone – how's this footprint with Microsoft? For them, they were like, before it was just, “I am.” It was account management and access management, which isn't really touching identity very much. They looked at DIDs in verifiable credentials as a way to say, “Oh yeah. Now all this rich identity that can be exchanged across businesses and business to consumer is something we can green light and have all sorts of companies be able to generate all sorts of credentials from banks, generating assertions that you're an accredited investor, because you have certain amount of liquid in the bank or something like that.” All these things become possible.

For them, it was just an expansion. They get more capabilities and features they can build into their tools. That's still going on. The reason why I chose to do this now is the opportunity certainly presented itself. At Square, I was informed of it and it was something I became interested in. Really, I didn't want Microsoft to just go away. They’re a big, important player, especially in the identity industry. The reason I felt it was a good time, is they're on a trajectory to succeed with what they're doing in the space. They've got a plan. It's essentially, just about finishing execution. I added just about all the value I could. I did mostly, a lot of some technical architecture for them. I got things in order, established a few things they were running.

I looked at it as like, where was is another place I can go to expand the scope and use of decentralized identity for a new class of things that may be a little different than how Microsoft sees me? Obviously square, being a Bitcoin-first company, being really at the forefront of this, seemed to be a really logical choice.

[00:11:39] CK: Real quick. Will Microsoft be leveraging the Bitcoin blockchain and their future solution?

[00:11:44] DB: Right now, they use ION. ION is the layer-two protocol that we helped develop for decentralized identifiers that runs on Bitcoin, completely decentralized. People call it Microsoft’s ION. It's actually developed in the Decentralized Identity Foundation. Microsoft was a huge contributor. It doesn't rely on Microsoft servers, in the sense that the network doesn't go away, if Microsoft is stopped doing that. To my knowledge, they still are doing that today. I just checked. I mean, my last day was Monday. Still using it. I think, the plan is to keep using it. Yeah. I guess, if anything changes in the foreseeable future, you'll know about it, probably.

[00:12:18] CK: I guess, just started at Square, right? Do you already know what's next, or if you'll leverage ION, or if something new? What's at play at Square?

[00:12:27] DB: Yeah. I got to be sensitive here, because this is literally my second, one and a half days in. They have some stuff that they're going to publish. I think, that they made public, they're publishing later this month, that'll clarify a little bit. I can't really go into too much regarding their use cases, or anything like that. Just wouldn't be appropriate, given the publication they're about to do.

I can talk about what I would hope we would do. I'm coming into this thinking, wherever we can use the great work that the community's done, some of those contributions being from Microsoft, and ION and stuff like that, certainly, I would advocate for that use. There's no reason to go and reinvent the wheel.

Wherever we can take components from the existing open source and standards of this ecosystem that has been thriving for five years, we're certainly going to do it, in my opinion. Now, I have to dig more in to understand exactly what applies and where. That's a discussion about use cases and comparing what fits them. I think, it's going to happen, if I had to eyeball it, and it looks like there's a good fit, obviously things at ION and other stuff, given what they want to do. Can't talk about specifics just yet.

[00:13:24] CK: All right, awesome. I guess, I would love to open it up to Shinobi, or P, or Level39, to maybe take the conversation, or jump in with some questions.

[00:13:34] S: First of all, it might be a good idea, Dan, just to breakdown ION and how a node for ION works and interacts with the main chain and then IPFS, just to really technically get across why that is an open thing that you can't just shut down, because Microsoft goes away.

[00:13:52] DB: Yeah, absolutely. When we talk about ION, for anyone who’s not familiar with this stuff, decentralized identifiers are essentially, think of them like, big usernames, big Twitter handles, essentially. They're unique and you can create them. You don't need to rely on any third party. Technically, your device and you have to be online when you create an ID. You can create as many as you want. You don't just have to have one. There's many systems of creating these IDs. These ideas are typically backed by public and private key pairs. Service end points, or URLs associated with them, where data might exist.

The communities has a 100 different implementations. Literally, almost a 150 of how you make decentralized identifiers. ION is one such implementation of the decentralized identifier standard. It's an implementation on top of Bitcoin. It's a layer-two protocol. It's permissionless. It's public. It doesn't have any central intermediaries. There's no validator nodes. There's no trusted authorities, anything like that. It's not a blockchain. It's not a separate blockchain, or some sort of pegged system.

What it really is, it is a way to use embeddable data that you embed inside a Bitcoin transaction, plus a second layer network to provide a global state of identifiers. If I was Alice and I wanted to get an identifier, I would use a wallet of some kind. I would generate an ID. That ID would have keys tied to it. Then end points for locations where my data exists, because ION does not contain any personal information. It's not throw your data on a blockchain, or anything like that. ION is about – essentially, it's like a replacement for DNS in some ways. Certainly for PGB, which just does those things better.

How it uses Bitcoin, essentially when Alice, or N number of other people, up to say 10,000, want to aggregate together some anchorings of new ideas that are creating, or of key roles when they get a new phone, those sorts of events that are infrequent, they would put them together in this file that's cryptographically bound, and then they essentially put a hash and IPFS hash of that in Bitcoin. Someone's got to pay the Bitcoin transaction. Anyone who can write to Bitcoin can interact with ION. They can participate in the ION network. Anyone can run a node. When those files get anchored, all the other ION nodes are watching. They're watching for those transactions that are encoded, specifically for ION. They pull down these IPFS files and process them, and the entire network agrees on the state of all the IDs that it contains. Meaning, the keys that are rightly associated at any given point, then the current URLs for where the data might be for those IDs.

The whole system is essentially, if you think about it in technical terms, it's like a strongly, eventually consistent database that is distributed and peer to peer and decentralized. It's not calling back to any master server to understand the world. Does that help?

[00:16:43] S: I think, in the simplest terms, it’s just like a giant, universal, global routing table. It has to be identity key for every endpoint, and then where to route to. Because of the way that it commits to Bitcoin, everybody sees every update. The only way you're going to ignore and update anything is if you consciously choose to, and tweak the code on your node to ignore something. Otherwise, it we'll see what happens. It will update your records and things will move on.

[00:17:14] DB: Yeah, that's exactly correct. The first question, a lot of times people ask, why are you even using Bitcoin? Or even using a blockchain? This doesn't need a blockchain. I think, the fundamental misunderstanding people have is that people, the common misconception, “Oh, well, just use a public private key pair.” Public key is a great identifier. It's a great identifier, if you commit to never ever losing that. Or, you never ever want to change crypto systems. When I say crypto systems, let's say RSA is a really good example of this, right? RSA keys over time, get bigger and bigger. It used to be like what? Back in the day, like 256. RSA keys were secure. Now, it's up to 248, or something is the recommended minimum.

[00:17:52] S: I think, 49 –

[00:17:53] DB: Is it 496 now? Yeah, it's gigantic, right? These are huge keys now, because it's just based on a different fundamental cryptographic premise. That continues to be eroded by generic CPU compute. As computers get faster, RSA gets easier to break when you have smaller key sizes. The issue, like let's say, I had an RSA key that was very small 10 years ago, is that if you use the public key as your identifier, you are locked to that key pair. Your ID cannot transition crypto systems underneath it.

That's really important in an ID system. It's important to be able to say, 10 years ago, I may have used Curve type X, but I've since transitioned three or four times when I get new phones and other things into better keys. Maybe in the future it's lattice encryption keys, which are thought to be quantum secure.

What Bitcoin does and the principle problem with decentralized identifiers and PKI, is that you need to maintain an identifier that stays stable, like the same ID over a long period of time. Where underneath the ID, you're rolling different keys and different routing table end points that are associated with that at any given time. The technical issue there is that you need what I would like to call chronological oracle, to be able to point to a system that says, this is the exact trail of changes that lead you to the state that Alice's ideas in right now. These are the current keys. If you don't have an oracle to do that, you cannot make sense of the world, because you essentially have branching problems.

Alice has 10 changes over 10 years. What if an attacker gets a hold of a phone from five years ago that was at change four, and then presents a branch state to someone and says, “Hey, I'm Alice. Here, this is state four.” They wouldn't know that there's these six other transitions she's gone through, so they would be fooled –

[00:19:41] S: The analog of the double-spend problem. You don't know which identity is legitimately her new identity after that past compromise.

[00:19:48] DB: Exactly. Yeah. Even if it wasn't a compromise, someone just acquired the keys, or maybe those old key types became weak, like in the RSA example. Someone could just start, essentially, becoming Alice. It's this global chronological oracle that is the foundation of the state system. That's why ION doesn't need any separate blockchain. It's really just, Bitcoin is a counting clock that puts things in a sequence. It's very helpful for ION, because it puts things in a deterministic sequence when it comes to DIDs.

[00:20:17] CK: Makes a lot of sense.

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[EPISODE CONTINUED]

[00:21:17] L39: One thing I wanted to just talk to find a few things, if I could, was first Daniel, I just wanted to thank you so much for you and the work you and your colleagues have done really in the space. I think, it's really tremendous how it's really flown under the radar for the last couple of years. There's so much work being done here. Definitely, there's a lot of confusion really in the space as to what this technology can do. I really think that, it's just been tremendous work has been done behind the scenes.

Really, in my opinion, one of the things I found from researching this article is that you have so many people who are focused on Lightning these days, and all the things people are trying to do with it to try and solve a lot of UX issues, you have the DIDs which really can solve so many things that are wrong with the internet today. I think, one of the things I was really fascinated about with DIDs was that there was a real humanitarian angle to it. According to the World Bank, for instance, over a billion people can't prove their identities and DIDs provide really a trust layer. It's like a missing trust layer for the web, that allows people to assert their own identities. They are an assigned identities. I thought that was a really key point that I learned from this from this period of researching this, was that the individual is really in charge of their identity. It's completely reversed the way people are used to on the internet.

I think, one thing that really stood out to me and I just want to point out, I think, to people was that this was something that was really envisioned from the early days of the web. Tim Berners Lee actually wrote about technology that sounds an awful lot like DIDs back in 2001. There's a May of 2001 issue of Scientific American. I'll just read here what he wrote. He wrote, “Another vital feature,” and this is – he's talking about the semantic web. This is the idea of where the web would be able to evolve to express meaning through any data that one could imagine, or pages would become meaningful to software programs.

It's really, was a crucial foundation of this futuristic architecture when they were envisioning what the web would be back in 2001. It didn't work out that way. It still hasn't, but it's still a vision that many people see for the web in the future. He wrote, again, this is in 2001. “Another vital feature will be digital signatures, which are encrypted blocks of data that computers and agents can use to verify that the attached information has been provided by a specific trusted source. You want to be quite sure that a statement sent to your accounting program, that you owe money to an online retailer is not a forgery generated by the computer savvy teenager next door. Agent should be skeptical of assertions that they read on the semantic web, until they have checked the sources of information.”

Really, just what struck me when I read that was wow, DIDs are really that technology, that Tim Berners-Lee had really predicted, really 20 years ago. We're really just starting to see it now, and really at this crucial point in the web where it can become a web standard, or the powers at be can try to suppress it. I just wanted to say that. Again, thank you again for everything you and your colleagues have done.

[00:23:52] DB: I appreciate that. It is hard sometimes, because I think, it's not as sexy as money on its face. No one's going to buy it. A, you don't buy DIDs and you can't trade them like money. There's no there's no getting rich. They just are utility that solve a set of, I think, very important problems. I think for that reason, maybe they hadn't got as much airtime as the sexy money stuff. Even though, I believe in Bitcoin and Lightning, obviously. I think, something to be aware of is that you're plagued with this every day. Even if you don't think you need decentralization, you probably do.

Every time you're asked for the same repetitive information by counterparties, like preferences to when you travel and things like that, every time you have to fill out forms that may contain the same data across jurisdictions, or companies, it's a declaration that we have a – It's a declaration that your data doesn't live with you. It's not semantically addressable. You can't hand it to people in secure fashion over known standard protocols. It's just a mess.

What DIDs do with verifiable credentials, and I want to dispel the sadness that people have with the credentials. COVID credentials are one thing, but credentials are just signed pieces of data. I could have a credential that says, “I worked at Microsoft for five years from time X to Y.” I can also have a credential that says –

[00:25:03] S: You could have a credential from me that says, “I think, Daniel is not a dickhead.”

[00:25:08] DB: Yeah. No, totally. That's the cool part about DIDs, is that you can have credentials that stand for just about anything. You can self-assert them. We never really had the ability to do this very well before DIDs and DCs. Think about all the types of credentials that are locked in silos, like banks, where they can't even assert these things. Because the only credentials common in the world, there are maybe six or seven credentials about vital proofs from governments.

The reason that is, is because there's no real effective way, a framework and foundation that people can exchange assertions across a pure net. That's what DIDs, plus personal data skills bring to the fore.

[00:25:46] P: Can you talk a little bit more about — I agree with everything that’s been said and I won’t pretend to understand it, even attempt in as much depth as you and Shinobi, but I think it's so compelling and I wonder – I think, it's really cool that Microsoft created this fertile ground for this to be created and worked on and developed. Maybe not created, but certainly developed. I have two questions. One is, what is the incentive for Microsoft here? What was the impetus for them to bend their significant influence towards this? Then also, you said earlier, I think, but how many businesses are using ION today? Two separate questions, both about Microsoft.

[00:26:20] DB: Okay. Why is Microsoft in this? Let's think about current centralized identity systems and even things like, OpenID Connect that you use to log in with your Twitter handle, or GitHub, or something like that. Relatively constrained systems. They don't actually transfer a lot of identity data. They're mostly about authenticating. You can log in. Maybe you can transfer email and a few other little fields. They're very limited. That's about all. That's about what they're for. That can be a big business, right? It's a billions of dollars for Microsoft to manage simple authentication, role-based access and other things for enterprises. That's what they make a ton of money on today.

When they looked at that identity, they're like, “Wow. Okay.” If people actually own their own IDs and companies could make these assertions that are far more about the state of their systems. Let's talk about, like banks could say, “Hey, you've got this much in your account and prove it was zero-knowledge proofs and all these different things, or supply chain,” what happens when you have standard verifiable credentials that refer to the manifest of a ship, or other things, right? All these things can become standardized proof assertions.

How Microsoft looks at that is, “Hey, we already supplied the tool chain for identity type tools and services to 95% of the Fortune 10,000. If we can create help create a standard for creating these assertions in this data that can be transferred across businesses and business to consumer, then we're the Levi's and picks and shovels of a new form of identity that opens up 99% of identity interactions to being standardized and more privacy-preserving and that thing.”

Whereas today, those interactions just don't happen. You can't go get a proof really from your bank in any digestible standard, open-source fashion that proves I'm a member in good standing. It's like a letter you got to get in a PDF or something. It's just an absolute – It's ridiculous. Microsoft looks at that and says, “Wow, there's this latent 99% of identity we could never enable, or help exist in the world and be transferable and used. If we can provide services for that, we don't have to own people's identity. We just want to be there to have dashboards and management interfaces and that sort of thing.” Does that help the money angle or why they would care?

[00:28:27] P: Yes, definitely.

[00:28:29] DB: That’s not scary. When I say managed, if Microsoft wanted to issue me a verifiable connection and said, “Hey, Dan. You left. You've worked here from these dates to these dates.” Some admin is going to hit a button that says, “Minty’s credential proves he worked here.” That's the service thing. That's the thing that they want.

[00:28:43] CK: Slight pivot, but just want to give a shout out to Level39 and an article he wrote for Bitcoin Magazine.

[00:28:48] P: The other question was, how many businesses are currently using ION?

[00:28:52] S: P, shut up.

[00:28:53] CK: We'll go with P and then I’ll shout out Level39.

[00:28:56] DB: I'll answer the thing real quick. ION, it’s a pseudo-anonymous system. We actually don't know who the nodes are. We could see a few hundred nodes online at any given time. I know that there's a few persistent, large companies that run it, and then there's lots of long-tail developers. I would say, it's still pretty nascent right now, but it's growing and I think that as it gets adopted for other use cases, I'm hoping Square, we'll see. Then it'll become even more prevalent.

[00:29:20] CK: All right. Back to complimenting Level39. Level39 spoke to Daniel and put a really comprehensive breakdown and explanation of ION and why it's so important into an article that is on Bitcoin Magazine. That's pinned to the top here, so you can see the tweet. Go to the article. If you want to learn more about this, that's a fantastic resource.

[00:29:39] DB: To build on that, I would say that it's probably the best holistic article that's ever been written on the topic of DIDs and true decentralized apps that I've ever seen. It really walks through from a use case-driven user, first-perspective. Even if you're not highly technical, you can read the use cases presented and they make sense, why you'd want to take back your data and have apps that have data stored with you and not their centralized service they're snooping on. Really, hats off. Our discussion turned into an article that was far more than any of the data I could ever provide, which is I think a really awesome skill that Level39 has.

[00:30:10] L39: I appreciate that. Thanks so much everyone. I just say, Daniel, that article, or the essay really came from you. You gave me a quick rundown. You just pinged me and you were like, “Hey, can I just give you a walkthrough of what the technology is?” I was like, “Yeah, sure.” Because we were actually working on just putting some resources together separately. We weren't even planning on writing this. Then you gave me this tour of ION and I was completely blown away. Because really, once it clicked for me, I really understood that it really was important for humanity.

Really, you can't vote, you can't get financial services, you can't get employment without identity. You really need that. It's a crucial trust layer for the web. That's absolutely essential going forward, for what the web is supposed to become. Without the DIDs and the technology that goes with it, we really just don't have that. We can't really achieve what the vision of what the web is supposed to become for us and for humanity. I appreciate you explaining it to me so succinctly. I say, once I realized what was happening, I was like, “We got to put this down into text, so people can talk to understand it.” Again, thank you so much.

[00:31:06] DB: Yeah. To double down on the absolute criticality of DIDs, just like Bitcoin, or Bitcoin for money, DIDs for identity, I 100% guarantee you, the powers that be will control you. If you don't win both money and identity, they'll control your identity. You can do some anonymous transactions. You can spend money. I'm not saying that Bitcoin doesn't solve a good subset of problems. When you want to go communicate to people, when you want to use apps, they'll have interdiction points everywhere, and they'll have the ability, let's say, it's compromising encryption or other things. They'll have the ability to step in the middle of you and your exchanges, of all things non – and that's not good.

I would look at that with urgency. I think, the CUNY has done great standing behind Bitcoin and these decentralized systems in the monetary realm. I think, we need to do at least as much in the identity.

[00:31:53] S: I wouldn't even say it's so much, they will control you through identity. That, to the degree it's going to happen, will happen. Real-world IDs aren't going away anytime soon. I think, the more important point is about how they can wall you off from disconnected identities. The important part is being able to make those secondary disconnected identities freely, because we're not getting rid of the requirement to have a government ID in our lifetimes, I think. If they really do start getting stripped with controls, we need to be able to have that alter ego that is persistent and can't just get deleted like that.

[00:32:37] DB: Yeah. Let me give a – to try and bring this home for the audience. Let me try to liken it to an app that it'll help out. You all probably use DMS on Twitter, Signal, Telegram. I forget if DMs are encrypted or not at all. Hopefully, I've set some stuff. In Telegram, these are encrypted forms of communication, but they're all applications. Just like you saw in China, China was able to effectively blocked Signal. You can't talk across Signal and Telegram to my knowledge. They use completely, application specific guts.

If you were ever able to not use those, or you get cut off from the identifiers that they create on their backend servers, it's not effectively an actual – it's not a decentralized means of communication. Just happens to be encrypted. What DID’s personal data stores do is give you an actual pseudonona, peer-to-peer way to communicate that's encrypted. Alice and Bob, they want to talk, right? Let's say, they have completely different applications they're using to chat. Acme wallet, or Acme chat and I don't know, Fabricon chat or whatever. They want to communicate. What their apps are going to do is look up the DIDs. Alice can say, “I want to chat to Bob.” It looks up Bob's DID, finds his personal data store address, encrypts data with Bob's DID keys from his public keys and sends it across a peer net to him.

He's able to get that on his app and basically view it, just based on DIDs and his personal data store connections. It doesn't matter about the application, right? It's a standard universal layer for encrypted peer-to-peer chat and data exchange. It works not only for chat. It works for all sorts of things. If you wanted to put encrypted sale offer objects in your personal data store. You could put in objects that are encrypted and only a subset of other external parties could see it. You could have marketplace facilities that way. You could have, my Google keep notes app. I'm going to I use it. I know Google is totally snooping on it. They know all about my groceries and all the super personal information, which is probably stupid of me.

What happens if you could have an app that would instead store all that data and provide the exact same front-end experience in the app, but the data is stored with you, in your personal data store, encrypted. No one else sees it. No one's snooping on it. I think, that's the power that we're talking about here. I think, that's the web that Tim Berners-Lee, as Level39 was saying, should have existed since the beginning.

[00:34:59] S: Yup. I don't want to go off on a tangent here. One thing that really kills me about this space in Bitcoin is this assumption that nothing can be done to slow down Bitcoin, or co-opt it. When you look at the entire history of the Internet, that is exactly what happened. These big companies, like Google, Facebook, Amazon, they came in and they became the center of the universe, to the point where we need protocols, like ION, like DIDs in order to escape that prison they've constructed, they've turned the Internet into.

We're sitting here right now, discussing how to get out of that prison. In Bitcoin's case, we should be thinking about how to stop it from being constructed in the first place. We should take lessons from what we're going to have to do to get out of the prison of the Internet right now, using things like DIDs.

[00:35:57] CK: I agree. Curious of Daniel, Level39. Want to react to that?

[00:36:01] DB: Yeah. I want to be a little sensitive, the prison – I want to say my personal side, you're right. I think, applications that exist today existed because they had to provide centralized accounts, or use federated plugins. It wasn't all because they were nefarious. There are definitely some bad actors as we look at here. The reality is, there's no real way to do identifiers where people can add other people and do these other things without present-day systems.

They just had to create them. Because there was no system for saying, “Okay, what ID are you going to be across Instagram and Twitter?” Nothing existed. It was really a technical problem, until Satoshi came in with timechain and solved the linear sequencing of events over time, which is really the actual fundamental thing to consult.

Even double-spend is actually a higher-level problem than what Bitcoin does. Bob McKella had a great tweet about how all clocks are centralized. Even your wrist, and your wristwatch, and all that stuff is technically centralized this week. It's that that Satoshi solved principally is just literally, we have never been able to put things in a deterministic word that can be verifiable before. Double spend is a downstream of that. Oh, now that we can put things in deterministic order, we can say, this was spent before this and how you can eliminate double spend. The thing that identity uses is the same principle underlying thing. This happened before this. I know it sounds absurd, right? It’s, oh, no. That's a simple test of already existed. No, and really, we saw that invented in 2009. That is what enabled both decentralized money and identity.

[00:37:30] L39: You needed the timechain in order to solve the decentralized identity. You couldn't solve it before then. I think, one of the other things that really is important to mention here is that there's this desire to turn DIDs into a web standard, and not everyone may be familiar with how that works exactly. It's rather involved. One of the things we are seeing is a lot of these incumbents are really fighting that, because they want to keep the federated login and not allow us to be able to own our own identities. I think, that's really an important fight that needs to continue on, until we achieve that. Until we achieve that standard.

[00:38:00] DB: Yeah. I told people. It was funny, when I started this work a long time ago, Chris Brown, by the way, is on the chat here. He started this work in more depth, even before myself. Prop to Chris. When we started this work, I think it was six years ago, I met someone who I really know in the community. I really like this guy. He’s a developer. I told him, I was like, “Hey man. They're not just going to roll over. They're not going to get involved now, and they're not going to be trying to attack us or anything now. I guarantee you at the end of this, when this is nearing the finish line, these entities, they have so much money invested in owning people. They own you by owning your identity.

When you log in, your log-ins go through them. When you have cookie and then token invalidations, all those things go through them. There's lots of data that goes through them that they get to see and track, and they're not going to be wanting to get that up. He’s, “Oh, no. Come on. They really don’t do that.” Then, what did you see? They refuse to participate in the process of the standard. Then right at the end with days left, they filed these formal objections. I knew it was coming for a long time, but it shocked some people that they would be that overt, that they would step in and try to stop it, because there is tens of billions of dollars per company on the line for some of these companies. There's no way they're going to let go.

[00:39:13] L39: The other thing that I thought was worth mentioning was the idea of really going into personal identity hubs, or just identity hubs. I like to think of them as a personal computer for your identity. I thought that was really fascinating, if we want to maybe just talk about that for a minute. To me, I think one of the saving graces we have here is that this idea of being able to use DIDs with identity hubs, it really opens the door to a lot of new, really exciting and interesting entrepreneurial ideas.

You could imagine Umbrel, or some other company could come together, create a box that sits in your home. It can be backed up into various encrypted backup areas and whatnot. The idea that you would be able to use this identity hub to communicate with other people privately and share your data and own your data in a way to let you own your money, basically, the same idea. I thought that was right.

[00:39:58] DB: Yeah. What are identity hubs? Just help define this for folks. I'm going to try and do this as non-technically, as humanly possible. Right now, when you use apps, you're updating it, it’s going to servers, typically, that are owned by that particular application. Which is common. They're not evil for doing that. It's the technology that have. What identity hubs are, is essentially, just think about it as you have your own little server that any app can store its data in that's with you, or it could be remote. You can have multiple instances of it that all sync. They all have the same data at the same time. You could ever remote instance, like in a cloud that hasn't used encrypted. It's not like you're giving your data, throwing all that data unencrypted to say, Google, or Microsoft, or something like that. They just happened to run it, like encrypted email, hosting. They're hosting some data, but it's encrypted.

The cool part about identity hubs is they can be the substrate against which a new class of applications are written, that developers have always wanted to, called serverless apps. Right now, serverless apps are something where people basically, pick one of the big cloud providers and they don't have to deal with server configuration anymore, but they still have a server. The true serverless app is I load an app onto my phone. Let's say, it's with the one that's cool webpages that you can install as an app, or just a client app that I downloaded from the store. It doesn't even have a backend server. It doesn't have its own application server that it's paying for, or anything like that.

It says, “Hey, this application does some neat things visually, but it needs to store some data,” in doing – Maybe it's a weather app, and you store your favorite weather locations, or maybe it's in all these different preferences and things like that, or notes with note-taking data. It asks you for permission to say, “Can I have access to your identity hub? Can you give me some permission to store lists type stuff on the notes app, or weather preference, location type stuff on your weather app?” You say yes. Then, that app turns around and stores the data directly with you, right? Not with some server. It's not clear with some giant provider with you. That is a dramatically different pair paradigm. I think, it drops the veil of try the seat back over our lives, to the extent that we can control in a way that we haven't for decades. I think that's incredibly important for humanity.

[00:42:04] S: Yeah. It's all like DIDs are pretty much the missing link in this whole wave of run your own personal server that Start9, Umbrel, all these apps are moving in. DIDs are that missing layer, that protocol to really plug all of that together and make that a viable platform to build that.

[00:42:25] DB: Yeah, absolutely. It's so flexible, right? The ability to hang public data off your identity hub for an ID, maybe have a public ID, I publish tweets there. Maybe I've published pictures there. Think about the ultimate ability as developer for intended public data. A bunch of people were putting data out in their data source that they intend for others to see. Think about the mashups in apps you can write. If you had semantic access through one standard conduit, to a bunch of people's data that they wanted you to see, like publishing the Craigslist, that stuff.

You could build those with APIs that are just open and standard layers for the Internet. I think, you're going to see mashups of data. The easiest ones to envision off the bat, or think about your music apps, right? You might use, I do this. I have a separate music app on my laptop than I do from my phone. I have playlists and preferences inside of the apps. I like to listen to the same music no matter what. I don't change my music preferences based on what app I’m in. It's a pain, because whenever I want to have a playlist reflected on one app versus another, you got to go recreate it and do a bunch of laborious work.

What if instead, those companies were like, “Oh, you know what? We're going to store playlists and those things that you generate while interacting with their app in your personal data store.” That way, they could both ask for permission to that same corpus of data, your music playlist, for instance. When you change it on one app, it's reflected in the other one. This is not just about nerdy shit that no one's going to use. This is about real stuff that makes people's lives easier. You should have the ability to have your preferences and your data with you reflected across the apps you choose to share it with, and it should be seamless, and it should eliminate all these time-sucking things you do, because we live in a land of silence.

[00:44:07] S: Daniel, this is about evolving 4chan to its final form. At least to me.

[00:44:14] L39: Absolutely. One of the things that I would recommend people do if they get a chance, if they're really interested in this space, at least is go ahead and look up the that article, or that essay that Tim Berners-Lee and two others wrote about their vision for the semantic web. It's called The Semantic Web, May 2001, Scientific American. You can find some PDFs of it online.

What really struck me about it – I re-read it recently, is that it sounds like science fiction. What he's describing is it goes to this idea of this brother and a sister, I think, the mother gets into an accident or something, or has some health issue. They basically start using the semantic web to solve all of the things they want to do and all happens automatically for them. It really sounds like science fiction. The missing link to all of this, iron ironically, is DIDs, in my opinion, to make it happen.

One of the reasons we can't make these things happen the way the web was envisioned is because of this missing link. It really brings this trust layer together. When you have identity hubs in that, you can really imagine, the doctor's office would have their own identity hub. The health insurance company would have their identity hubs, and it would all be talking to each other instantly. Hundreds of them would be interacting with each other all instantaneously in the background, as you spoke to your digital assistant and ask them to do various things. The web is so much more to evolve, too. You can just see that happening, where DIDs and identity hubs are this crucial layer of bringing that to reality.

[00:45:30] DB: Yeah. Think about use cases that really matter to folks, like in medical, right? Where you have a primary care physician, and you might have these medical records that because there's been no real place to put them, that's semantic under your control encrypted, that’s just massive. You have to move records and it's just super laborious.

This is a system where that data can move with you now. You could permission your primary care provider to potentially see all of your medical data. Then maybe, you need to go to a specialist for something, and they can have a delegated ability to permit access to a subset of that. If your nose, throat specialists, they don't even have to give away permission to all your data. They can delegate permission to a subset. You can have the ability to extend delegated authority to say, “I want this actor to have access to this,” and they can give away X percentage of that, or these things of that.

Yeah, like you said, Level39, that's where it starts getting into this really interesting space of hubs and IDs talking to each other. How could we reimagine Uber and Lyft if we had DIDs for drivers with personal data stores, and we could have matching networks, where you have crawlers going around, scanning at a high rate of speed IDs that dropped themselves in as drivers? You could immediately create these vibrant matching networks that were decentralized and break it down into silos of what they really are, and that's a matching network, right? That's what they're defending at the core of it. This is a substrate to erase those barriers. You could create apps that all the drivers interact on the same basic substrate, you just differentiate yourself based on the driver application and UI that you provide. If you do a good job, people use your wallet, maybe to make 1% of whatever their driving is, but they could switch any time, and it's all the same underpinning tech. It can change the world.

[00:47:15] L39: Yeah. It goes on to all these other things that you had mentioned. You create a Craigslist that just – it was a UI that literally scanned the world's data stores for public sales of junk that people had. You could then instantly have it cataloged in this UI that is dynamic.

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[00:49:31] L39: Do you want to quickly just talk about, I think there must – I'm a huge Lightning fan when it comes to sending money. I know, there's this really huge push to turn Lightning into all these applications that are beyond money. Do you want to talk to maybe just quickly – I think, I asked you this question. You did a really good job just giving me a one-liner as to why. You see maybe a different approach than using Lightning for everything. Do you want to explain that really quick, Daniel?

[00:49:51] DB: Yeah. I think, Lightning is fantastic for what it's good at, for sending monetary payments and other things. I think that it isn't particularly designed for long-lived IDs for the most efficient forms of pathfinding and pure lookup, given what we can do with more direct DID relationships. The data store component is not there. Also, you don't need every exchange to be piggybacking rails of money, right? One really good example of this is social inboxes, right? People say, “Oh, the way that we stop spam is we put up a Lightning invoice that says, email me. You need to pay.”

It sounds a great idea at its face. Oh, this is going to cure all the world deals. What are you going to charge for someone sending you a text message, or sinks message, or whatever? Oh, a dollar? Okay. Here's the problem. Money isn't always the best sledgehammer. Let's say, it's an older person who might be more likely to be taken advantage of by scammers. They might be happy to pay a dollar. Happy. Because they know that the ROI they're going to hook one out of every 50 people, they message, their spend of $50 are monetized over those folks for the thousands they're going to fleece from those people is nothing.

You would have to set the amount inordinately high, right? To the point, no one would even want to message you that was your buddy. It's just shitty. What if you had DIDs in personal data stores and you could say, look, you need to have a credential. You need to prove that you're a physician from this medical group, or you need to prove that you're actually my life insurance company, or that you're an accredited Better Business Bureau business, to be able to send a message to me. That was free. A 100% free, because credentials are actually a much better means of mitigating spam and forcing actors to provide proof that they're – That's just an example. I think, Lightning is a great hammer. I don't think everything is a nail. That's my only position.

[00:51:36] S: Also, there's just a really toxic social incentive, I think, when you try to start baking micropayments into everything like that. In terms of creating that monetized aspect of normal everyday interactions. I don't think that is healthy on a social level to really try and bake monetary incentives that deeply into our day-to-day interactions with everyone. That's very unhealthy in my opinion.

[00:52:02] DB: Yeah. I mean, also, because it's completely unnecessary. A lot of the traffic we do, especially peer-to-peer, like you could do with device peer-to-peer communications that are over subnets and stuff is not even something you would need to charge for. If you know who your counterparty are, why the hell are you charging anything? Just talk to them. Most of your app data, you don't need to charge yourself, or your buddy for sharing some image. Just send it. Just send it to your identity hubs and let's be done with it.

I think, micropayments are fantastic for if I'm talking to a business's API, and it wants to make a little money on that. It can assert that it's going to require Lightning payments. I think, that's a fantastic use case per call payments. It's just a use case if you happen to be a developer talking to an application that wants to put that up as a gate. Pick your use case, but it's not every use case.

[00:52:44] CK: Do you see a world where we're Lightning and DID fit together?

[00:52:49] DB: Oh, absolutely. I'll give you a quick example of what that integration might look like. DIDs can be linked to any form of payment, and I'm going to – Please, avert your ears here. You could have any form of cryptocurrency address tied to them. You can have your Square, your traditional fiat tied to it, whatever. If you look someone's DID up, you could say, “What are the ways I could pay?” They could go get the semantic instructions on all the ways they could pay. One of those ways could be a Lightning invoice. It could say, here is the Lightning invoice that my hub is going to vend to you. It doesn't matter what key, or what form of Lightning current channel, or the channel state is. It doesn't care. It's just, give me this DID’s current signed invoice right now. You can look up even payment information by DID if you wanted to. That's a cool feature. That's one way you could integrate Lightning.

Another way would be to say, “In my hub, I want this subset of my data to cost money to look at.” You could say, “Not to block spam, but just, if you want to read this from me, CDs, pictures, I'm going to charge you a dollar.” Then someone's got to fulfill that invoice before your hub is going to let that data out to be viewed. Now, if they save it and share it around, there's always problems with digital. If they right-click your JPEG, and you should have a look, we can do, we can do.

[00:53:57] L39: CK, do we want to have any questions before we wrap it up?

[00:54:01] CK: There was a question about Taproot. Does Taproot affect to what you're building at all? I know that is coming up very shortly to actually be active.

[00:54:09] DB: In terms of ION, ION really uses embedding of op returns. There is the ability with Taproot, and it uses non-SEGWIT address and stuff, so it's bloated. We got to change that. It doesn't do anything bad, other than it's needlessly using space and block weight, which, you can yell before I'll accept it. SEGWIT was new to me in the protocol. When you go to taproot, has transaction forms that are even smaller. If we transitioned, just skipped over to that, we could shave even more bytes and potentially get the per cost of a ION anchoring transaction down, maybe 45%. That's always good. It doesn't really need a lot of the taproot mechanics, like any of the DLCs, or anything like that. Just paying less for transactions in school and taking up less block space.

[00:54:48] CK: Cool. I guess, I'll let a couple people up, but I do know that we're probably getting to the last 10 or 15 minutes here.

[00:54:54] P: There's one thing that I just wanted to comment on that you mentioned earlier, which was, I was going to ask the question, where is the incentive? Because as you mentioned in another part of the conversation, the centralized identity providers are actively fighting this idea, right? In the same way that we see centralized financial institutions fighting Bitcoin, which we can expect them to do, because you show me the incentives, I'll show you the outcome thing, right?

I was going to ask, what is the thing that will drive this forward inevitably? What is the incentive for individuals to basically, fight this? You already answered it. I just really wanted to call attention to it, that these types of systems, these decentralized identity systems provide true and unique utility to end-users. The ability, as you said, to share your music preferences, to have apps that basically, can – are pulling data from your own identity hub is truly profound. The article that Level39 mentioned recently is a great example of what could be possible in terms of extrapolating outwards. I think, that's the thing that's going to drive this. It's a very exciting opportunity, because it provides so much utility.

[00:56:04] DB: Yeah, I think that's right. I don't think it's not – empowerment of users and encryption and all these buzzwords thrown around that sound great and cool, or they are, but at the end of the day, apple pies and motherhood don't drive people to do things, like you're saying. True utility that is demanded by users and smoother experiences that can be provided by product managers who say, “Wow, that's just a much better way I can do this.” A good example, I think, it was one second of time on Amazon loading delay, caused a noticeab

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