What Web3 Identity Requires

To develop a global open financial system, we must ensure that web3 is accessible to all. This means combining the best of web2 and web3 to create an identification experience that is intuitive, forgiving, and trustworthy. Our first step is to make it simple for everyone to obtain a free web3 (ENS) username, but there is still work to be done.

If you've used cryptocurrency, you've probably felt nervous about transferring tokens or NFTs to daunting 42-character addresses like 0x2133a64a3bE8B64827B26B08e166d0b478bd09D3. We collaborated with Ethereum Name Service (ENS) to enable customers to claim "name.CB.id" usernames through Coinbase Wallet's browser extension.

To build a global open financial system, we must ensure that people from all walks of life can use web3. Advocating for the adoption of a human-readable username standard is an important step toward making web3 more user-friendly for everyone. Anyone can now claim a free "name.CB.id" web3 username to send and receive crypto (rather than requiring 42-character addresses), communicate with others, and utilize it as the cornerstone of their web3 identity with this functionality.

While this is a significant achievement, your username is simply one aspect of your online identity. Other identity-related deficiencies must be filled before web3 may be used by billions of users. While web3 shows early potential, it is frequently unintuitive and lacks acceptable methods of transmitting and assessing trust and legitimacy. To solve these shortcomings, we must combine web2's convenience with web3's privacy, security, and control.

What exactly is identity? What difference does it make?

You use your identification to acquire access when you create an account or sign in to a product. Identity is how goods and systems represent people, manage access and authorization, and evaluate trust. Identity is composed of three major components:

1. Representation: how you are portrayed as a user (e.g. your username and profile).
2. Access: demonstrating ownership of said identification (e.g., logging in) to gain access to the product.
3. Authorization: deciding what access you have based on who you are.

Today, you are represented by a wallet address or username such as nick. eth or nick.CB.id on web3. To configure your wallet or restore access to your wallet, you use web3 and your seed phrase. Certain tokens or NFTs can grant you access to special communities, goods drops, and other benefits.

Isn't this a problem that web2 has already solved?

Web2 firms have made significant investments in producing user-friendly identification products. However, fractures in web2 identity are beginning to appear: the necessity to maintain several accounts and passwords; the constant spam; and the insidious lack of privacy, security, and control.

Many of us have sacrificed our privacy, security, and control for the sake of convenience. We only learn about web2's drawbacks when we are affected by a data breach, corporate overreach, or loss of access. However, in today's environment, these occurrences are becoming unavoidable.

What is required for web3 to thrive?

The fundamental consumer requirements for web2 and web3 identities are the same. The distinction is in how they are met. Web2 is centralized, sacrificing privacy, security, and control in exchange for convenience and flexibility. Web3 is decentralized and trustless, however, it has usability flaws. To ensure the success of web3, we must combine the best of both worlds (flexibility and usability without losing privacy, security, or control) and create an experience that is:

• Intuitive. Every user should be able to transact and interact with others using human-readable usernames rather than scary 42-character addresses.
• Forgiving. Every user requires security, and they require a method to regain access without relying on the safe storage of a sensitive recovery phrase – where a single error might cost someone their livelihood.
• Trustworthy. People must be able to determine whether the person or app with whom they are dealing is trustworthy, and applications and people must be able to demonstrate trust to others.

Web3 identity evolution

Many of web2's faults can be addressed with web3. You hold the keys to your identity with crypto, and your security is in your own hands. But, let's be honest: web3 as it currently exists is daunting. So, what do we, the web3 community, need to build to make web3 benefits available to everyone?

A persona for the user.

We must make it simple to create and manage portable, interoperable, human-readable usernames that sit on rich, adjustable public identities that range from anonymous to completely public. Users should be allowed to keep several identities for various settings (e.g. one for work and one for gaming).

Tools to help everyone stay and feel safe.

Today, web3 breaks one of the fundamental laws of security by exposing our identities to a single point of failure: the recovery phase. Identity theft can occur as a result of a compromised app, device, or social engineering attack. MFA is the archetypal web2 example, and web3 will require an identical solution that can secure every user.

When anything goes wrong, you can recover.

We've all forgotten a password, and recovery phrases should be no different. We can't scale an environment in which losing a recovery phrase means losing access to one's livelihood – users must be able to regain access. Products such as social recovery and the multi-party computation (MPC) technology that powers Coinbase's app we've all forgotten a password at some point, and recovery phrases should be no different. We can't scale an environment in which losing a recovery phrase means losing access to one's livelihood – users must be able to regain access. 

Trust and authenticity signals

Passports only function because governments certify their legitimacy. The utility of web3 identity will also rely on trustworthy individuals attesting to an identity's legitimacy. Users will require methods for gathering, managing, and disseminating "attestations" that authenticate their credentials and authenticity. Applications will require methods for both issuing and validating a user's identification and credentials.

Interoperability between web2 and web3

The ideas of "web2" and "web3" will merge with time, and users who are further along the adoption curve will be unable to tell the difference. They will expect to be able to access both "web2" and "web3" from a single identity and set of credentials, which we must enable. Similarly, we must give users a chain-independent identity that they can utilize across web3.

Creating an identity for web3

Building a good web3 identity layer will necessitate intense focus from strong teams that can create and iterate quickly. This frequently entails constructing and refining locally before scaling worldwide (and in a decentralized way). Coinbase and other enterprises must embrace this long-term vision from the beginning: open source, open standards, and tight collaboration with the broader web3 ecosystem.

Above all, we must not lose sight of the primary promise of web3 identification. We must design in a way that emphasizes the user's privacy, security, and control while being intuitive, forgiving, and trustworthy.

We've started this journey alongside organizations like ENS and Verite to provide everyone with a free web3 identification (CB. id), and we'll keep increasing our identity offerings. Watch this space: this is merely the beginning of an exciting new chapter for Coinbase and the web3 community at large in terms of identification and web3.

Source: @coinbase