GM,

The topic we are about to discuss may seem surprising at the first glance, but after reading this article, I believe you will think, "Oh, I’m not surprised."

Last week, the Chinese government announced the launch of a decentralized digital identity system called RealDID on the blockchain. It is expected to issue 5 million sets of blockchain-based identities by 2024. In comparison, the most widely known blockchain identity mechanism, Ethereum Name Services (ENS), has only around 2.2 million registered sets to date. In other words, RealDID, led by the Chinese government, is poised to become the world's largest decentralized digital identity system in 2024.

However, foreign media has generally downplayed this news, and Chinese media has mostly approached it with caution. It seems as if everyone can sense that there must be something tricky about it—how could the Chinese government genuinely build a decentralized infrastructure? To understand what sets RealDID apart from others, we must delve into the blockchain behind it.

Coinless Blockchain

The Chinese government also emphasizes democracy. However, the form of democracy in China, without the presence of voting, operates in a manner vastly different from that of Taiwan. This is a common tactic of the Chinese government, creating confusion easily. In the field of technology, the Chinese government's understanding of blockchain is also somewhat divergent from ours.

Last week, the working group behind the Chinese government-led blockchain platform, the Blockchain-based Service Network (BSN), held a product launch event, announcing the introduction of RealDID—a decentralized digital identity system on the blockchain:

Digital identity has become a crucial foundation for achieving economic health, social harmony, and stable security, simultaneously... in the development of Digital China. On December 12, 2023... the National Information Center and the Ministry of Public Security... officially announced the BSN RealName DID service. This service... fully integrates the BSN blockchain service network and the CTID digital identity chain, meeting the management requirements of "anonymous in the front, real-name in the back."

RealDID is a new application built on top of BSN. BSN is a blockchain with Chinese characteristics, complying with the government's policy against cryptocurrencies; it is a "Coinless blockchain." A blockchain without coins is like democracy without voting; although they share the same name, their actual operations are vastly different.

Cryptocurrencies serve as the economic incentive and foundation for decentralization in blockchain systems. Take Bitcoin, for example—miners (participants from around the world) contribute computing power to mine Bitcoin in exchange for earning cryptocurrency. Miners earn cryptocurrency, and the Bitcoin system gains computing power from users worldwide, forming a decentralized system collectively maintained by global participants.

However, in the eyes of the Chinese government, cryptocurrencies are considered illegal. He Yifan, the CEO of Red Date Technology responsible for building BSN, once mentioned in a media interview that he doesn't even have a wallet. If someone were to send him Bitcoin, not only would he be unable to accept it, but he would also inquire whether the sender could convert it into fiat currency. BSN, which lacks cryptocurrency as an economic incentive, is essentially a form of consortium chain. Nodes in a consortium chain cannot profit from it and usually participate to align with corporate or government requirements.

RealDID, on the other hand, is a universal digital identity mechanism within the Chinese consortium chain. But why is the Chinese government establishing a digital identity system for people from scratch? The answer lies in the desire to protect people's privacy.

RealDID

According to the BSN press release:

In the digital age, a vast amount of personal privacy data, including identity information, location information, communication information, etc., is stored in various applications on the internet. Therefore, establishing a comprehensive mechanism for protecting personal privacy data is the fundamental requirement and inevitable trend for the next development of the internet. The BSN RealName DID service, provided by the CTID digital identity chain, generates decentralized digital identities with traceable real-name attributes. Based on this service, solutions covering various fields can be developed to effectively ensure the security of personal privacy data.

Just by looking at this description, it is unclear why RealDID can safeguard privacy and what it safeguards. Supplementary information from the South China Morning Post is required:

The common login method often requires users to log in with WeChat, and Yang Lin, the director of the Chinese Ministry of Public Security Research Institute, said, "This allows large internet platforms to have a highly monopolistic control over data traffic, leading to more severe data leaks." ... The new system uses Public Key Infrastructure (PKI). After user identity verification, the public key is stored in the RealDID document published on the Yan'an chain ... Since personal information is stored by the "national regulatory agency," the government can access user identities when needed, but companies won't see this information ... Using Public Key Infrastructure eliminates the need to provide personal information to platform operators, even just a little.

Now the truth is revealed!

RealDID is a technology upgrade promoted by the Chinese government, aiming to transition people from traditional account passwords and social logins to a login mechanism represented by RealDID.

Replacing traditional passwords with private keys is indeed a global technological trend in recent years. Blocktrend has previously covered two articles on passkeys (1, 2) and invited Chen Changwu, Chief Scientist of imToken, for a recording, discussing why private keys are more secure than passwords and the measures currently available to help people safeguard private keys.

Even without a cryptocurrency wallet, private keys have already entered our daily lives through passkeys. Google and Microsoft accounts can be set up with passkeys for private key logins. Recently, I have also changed the security verification mechanism of Binance exchange from the original three locks of email password, Google verification code, and SMS verification code to only one lock with a passkey. Although it may seem less secure at the first glance, the passkey is actually stored only on the personal device, making asset withdrawals more convenient and enhancing security.

RealDID is also based on a public-private key identity authentication mechanism. RealDID does away with account passwords and assigns each user a real-name private key. Users can register and log in to various online services using the public key generated by this private key.

Setting up account passwords poses a risk of password leakage, and using social logins exposes privacy to platforms like WeChat. Now, with the public-private key mechanism for registration and login, there are no passwords to leak, and companies find it challenging to trace user activities. Websites providing services can hardly determine the identity of the logged-in user just by looking at the public key.

The ultimate goal of BSN is to create an official digital identity for the 1.4 billion people in China using RealDID. In the future, whether Chinese citizens are dealing with the government or registering for online services, they can navigate seamlessly with RealDID. Practical examples presented during the launch event include signing online contracts, sending encrypted emails, or sharing medical records. Through RealDID's public-private key mechanism for encryption and decryption, even if third parties intercept the information, they will not know who the information represents.

This is a colossal undertaking! It means that all government agencies and businesses must implement a new registration and login mechanism for RealDID. It inevitably raises curiosity: when did the Chinese government become so concerned about user data privacy? This is a question that technology alone cannot answer.

National Login

The Chinese government believes that when privacy is leaked by companies, it fosters online fraud and criminal activities. Furthermore, in the future, people will only need one set of RealDID to navigate the digital world as conveniently as holding a physical ID card, making it an effective measure against fraud while promoting convenience. Therefore, there is a necessity to promote a new type of login mechanism represented by RealDID.

However, from a different perspective, RealDID is like an upgraded form of online surveillance. Over the past year, the Chinese government has continuously strengthened its control over the digital world through various means, including pressuring Apple to modify the AirDrop file transfer mechanism and requiring internet celebrities with over 500,000 followers to disclose their real names publicly, indicating accountability.

Implementing RealDID is a way to reclaim users' digital footprints from companies and bring them under government control. Logging into websites with WeChat, Weibo, or Alipay allows companies to know users' online activities. Although the Chinese government aims to obtain these footprints, it is still one step removed.

However, when people use RealDID, they can avoid tracking by companies but may not escape the government's control over digital footprints. RealDID upgrades social logins to national logins. The operators of the blockchain are the Chinese government, and individuals must undergo government real-name authentication to obtain RealDID.

The most impressive moment during the product launch event was when He Yifan, CEO of Red Date Technology, told everyone that people were originally swimming naked in the digital world. But with RealDID, people now have "some" control. After saying this, he added that he wouldn't claim absolute control, but there is a certain degree of control. Although he didn't explicitly state everything, he said a lot.

The likely driving force behind China's creation of RealDID might be for the government to better understand the digital footprints of its citizens. The ultimate goal of the Chinese government may be to establish a real-name network environment and incorporate people's online behavior into a social credit system for scoring.

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