What’s an on-chain identity?
There are a few things we know now; (1) what DIDs/wallet addresses are, (2) that we need these wallet addresses to transact and use the blockchain, (3) these transactions are immutable and will forever remain, (4) and that’s why a decentralized identity is powerful; once you create your decentralized footprint no-one can deny its ownership.
However, this raises the question of what exactly an on-chain identity is. Isn’t it all just transactions on the blockchain? And how can these transactions accrue to form an on-chain identity?
Well, the simple answer is that transactions are social by nature. An economic system essentially forms the foundation of all societies, where production, resource allocation and distribution thereof is not only needed for survival but also brings communities together. We need to interact and transact with others to form a healthy society. Here our identities come in play.
Economic transactions take place every day and actually say a lot about us. We all have our favorite shop to buy bread, for example. We also have reasons for returning to this shop; perhaps it’s close and familiar, our friend works there or they plainly have superior produce. That’s our preference and it gives light to some aspects of our identity.
Transactions are social
On-chain we have our preferences too; denoted by the exchanges (decentralized banks) we like, the organizations we interact with, the people (other wallet addresses) we transact with and how many or few times we do this. All these small interactions contribute to how your on-chain behavior is perceived and inadvertently your on-chain identity too.
Transactions on-chain can take many forms, some more complex than others. What I mean by that is that it’s more than just a monetary transaction.
DAOs and on-chain identity
Decentralized autonomous organizations (DAOs) are basically blockchain “governments”. The difference is, these governments are completely transparent and run by a community, that is, social governance. Arguably participation in DAOs shows more complex on-chain transactions. Once a case is opened it requires participants to take a stance on topics by placing a vote or debating in public.
This vote or debate takes place among other economic participants and is inherently communal. Perhaps we can say that here we see some aspects of your morals and beliefs just like one would when partaking in traditional politics today.
Art and personality
Art displays creativity and sensitivity, whether from the creator or the perceiver. Art on the blockchain is referred to as non-fungible-tokens or better known as NFTs. Artists spend time creating these NFTs and ultimately deliver a product that reflects them and their identity. Buyers also take time deciding to purchase one that is to their liking. Our transactions to collect on-chain art, NFTs, show our likes, aesthetic values and possibly just eagerness to join an NFT community.
Those are a few simple examples of how engaging with decentralized apps has social components to it. At the end of the day, we can trace the data of a wallet address to paint a picture of an individual.
Yet, we do need to consider that tracing a wallet address (e.g J6QDz...cP5s) can be challenging. We are only human and these lengthy addresses aren’t very recognizable. In saying this, many transactions or social interactions on-chain can go unnoticed and we’d fail to paint the full picture of the person. That’s where a memorable name would help.
Discussed next, on-chain naming and building a reputation.
