What Is Digital Identity? Definition & Key Risks

With digital services now deeply embedded in everyday life for both businesses and consumers, our online personas have become an essential part of our identities.

Just as you safeguard physical assets like your passport or driving licence, it’s crucial to protect the elements of your digital identity.

But what exactly is digital identity, and how can we protect it?

As a writer and researcher in cybersecurity, I’ve seen how critical digital identity has become in today’s interconnected world.

"As digital identities continue to shape our interactions with the world, protecting them is no longer optional but an essential part of modern life."

— Paul Holland, Founder, Beyond Encryption

Definition of Digital Identity

Digital identity is the online representation of an individual's personal information.

It includes a wide range of data that identifies you as a person and often serves as the foundation for digital authentication, allowing you to prove your identity in online environments.

As the digital landscape evolves, the scope of digital identity continues to expand, influencing everything from simple online interactions, like social media and email, to critical areas such as online banking, e-commerce, and government services.

With so many interactions now taking place online, managing and securing digital IDs has become crucial to protect personal data.

"In today’s digital-first world, understanding what constitutes a digital identity is key to both individuals and businesses safeguarding themselves."

— Mike Wakefield, CTO, Beyond Encryption

What Comprises a Digital Identity?

Several key identifiers make up a digital ID, including:

• Usernames, passwords, and email addresses. The most common identifiers for individuals on various platforms.
• Biometric data. Unique physical characteristics, such as fingerprints, facial recognition, and voice patterns.
• Digital footprint. The trail left by your online actions, including browsing history, purchases, and social media activity.

It's important to note that your digital identity is not just composed of the information you share intentionally – it also includes the data you leave behind unintentionally during your online activity.

Where Do We Use Digital Identity?

Digital identity plays a role in many aspects of daily life, often without you even realising it.

Some of the main areas include:

Online Banking and Finance

In financial services, digital identity is critical for secure access to bank accounts, investment portfolios, and various financial transactions.

Users typically need to pass multi-factor authentication to complete financial tasks.

E-commerce

When shopping online, digital identity helps establish trust between vendors and customers, enabling secure transactions.

It also facilitates personalised shopping experiences, like saved shopping carts and tailored product recommendations.

Healthcare

The healthcare sector increasingly relies on digital identity for patient record management and appointment bookings.

Since COVID-19, patients can more easily access their medical history and communicate with healthcare providers online, with digital ID making sure private health information is secure.

Government Services

Governments worldwide use digital identity to make services more accessible and streamline processes like tax filing, voter registration, passport applications, and accessing social welfare benefits.

Travel

Digital identity enhances travel convenience and security, with electronic passports, boarding passes, and digital driver's licences becoming more common.

Education

Digital identity is crucial in online learning platforms, student portals, and academic records, making sure students and educators can securely access resources and protect academic information.

Employment

Businesses often use digital identity verification during the hiring process to authenticate applicants' qualifications and backgrounds.

"The process of establishing and using digital identities has become the backbone of secure online interactions, from banking to healthcare and beyond."

— Adam Byford, CCO, Beyond Encryption

How Do We Use Digital Identity?

To understand how digital ID works in everyday life, let's explore the process of opening a digital account.

1. Registration

When signing up for an online account, you typically need to provide personal information such as your name, email address, and phone number.

In more secure environments, different levels of identity proofing may be required.

For instance, a social media account may only require basic identifiers, while a financial service might need document verification and scans of your passport or driver's licence.

2. Verification and Authentication

After registration, the system usually verifies the provided information to confirm its accuracy.

For example, a verification link might be sent to the email address you provided.

Once verified, you will need to authenticate periodically to access services. Authentication can be divided into several types:

• Single-factor authentication: This involves only one layer of verification, such as logging in with a username and password. It relies on something the user knows but is generally less secure due to the risks of password hacking or guessing.
• Multi-factor authentication: This requires two or more verification factors, usually a combination of something you know (password), something you have (mobile phone), or something you are (biometrics). Multi-factor authentication is recommended, especially when dealing with sensitive data.

3. Authorisation

After successful authentication, authorisation determines what resources a user can access or modify.

For instance, role-based authorisation is common in corporate settings, assigning specific permissions based on a user’s role within the company.

An entry-level employee might have lower access levels than a manager.

What Are the Risks and Challenges of Digital Identity?

While digital ID simplifies online services, there are risks associated with holding so much personal data online. These include:

1. Identity Theft and Fraud

One of the biggest risks is identity theft.

Cybercriminals use methods like phishing or malware to steal personal data.

If they gain access to your digital ID components, they can either sell the data or use it to commit fraud.

2. Data Breaches

With digital IDs being used across various organisations, threat actors often target companies storing large amounts of customer data.

Companies that don't use adequate security tools are more vulnerable to breaches.

According to IBM research, 83% of surveyed organisations had experienced multiple data breaches (approximately £66 million).

3. Privacy Concerns

Digital IDs hold valuable information, which businesses might use for purposes like targeted advertising or data analysis.

Sometimes, this data is sold to third parties, raising privacy concerns.

Despite GDPR, businesses continue to be fined for improper data usage each year.

How to Protect Your Digital Identity

With digital threats increasing, protecting your data is crucial.

Strong Passwords

Use strong, unique passwords for each of your online accounts.

Use a mix of upper and lower-case letters, numbers, and special characters, or follow the National Cyber Security Centre’s three random words technique.

Avoid using personal details like names or birthdays.

Two-Factor Authentication (2FA)

Enable 2FA wherever possible to add an extra security layer.

Even if attackers get your credentials, 2FA can prevent them from accessing your accounts.

Connection Authenticity

Use secure and private Wi-Fi connections. Avoid public Wi-Fi when accessing sensitive information, or use a VPN if necessary.

Security Tools

Use security software like firewalls, antivirus programs, and encrypted messaging solutions to protect your devices and communication channels from threats.

Awareness Training

Stay updated on digital threats like phishing and social engineering.

Avoid clicking on suspicious links or sharing information with unknown individuals.

Regular System Updates

Keep your operating system, antivirus software, and other applications up to date.

Privacy Settings

Review and adjust the privacy settings on social media and other online accounts.

Be cautious about the information you share online.

A Collective Effort

As the line between online and offline continues to blur, protecting our digital identities is more important than ever.

Safeguarding against rising digital threats requires a collective effort, with organisations prioritising robust data security and individuals adopting safe online habits to protect their digital IDs.

FAQs

What Is a Digital Identity?

A digital identity is the online representation of your personal information, including usernames, passwords, and other identifiers used for authentication.

How Can I Protect My Digital Identity?

Protect your digital identity by using strong passwords, enabling two-factor authentication, and being cautious of phishing and other online threats.

Why Is Digital Identity Important?

Digital identity enables secure online interactions and access to services like banking, healthcare, and e-commerce while protecting personal data.

What Are the Risks of Digital Identity?

The risks include identity theft, data breaches, and privacy concerns from excessive data collection and improper use.

Can Digital Identity Be Fully Secure?

While complete security is challenging, adopting strong practices like multi-factor authentication and staying informed about threats can significantly enhance protection.

References

IBM Research, IBM, 2023

Three Random Words, National Cyber Security Centre, 2023

Reviewed by

Sam Kendall, 20.12.2024

Sabrina McClune, 20.12.2024