Stardust upgrade was recently launched with a host of refinements for the IOTA ecosystem. One of them was Identity 1.0 which gives users ownership and full control of their digital identities while guaranteeing their privacy.
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The new feature overhauls the generation, updating, and conflict resolution of DID. The key element of the upgrade is its integration of Alias Outputs capable of interacting with other Layer 1 networks housing fungible and non-fungible tokens (NFTs).
Advantages Unlocked by IOTA Identity 1.0
The novel infrastructure of IOTA Identity 1.0 is highlighted by the launch of Alias Outputs. These DIDs are designed to allow the infusion of innovative applications within the network.
First of all, Alias Outputs opens access to the DID of another entity. This is useful in the delegation of control to custodians or business subsidiaries where one serves as the governor and the other becomes a state controller.
In this setup, the governor authorizes a state controller. Meanwhile, the state controller decides the changes within the DID. Identity 1.0 is currently limited to one state controller, however, IOTA confirmed that it’s working on an update allowing multiple controllers.
Secondly, the revamped DID system can be converted into a decentralized finance (DeFi) wallet address. This ensures that token transactions will only be accessible to the parties involved and whoever controls the recipient’s identity if an Alias Output is in place.
On the other hand, if an Alias Output is the sender, the recipient can use the DID to check the origin of the funds. This way, the veracity of the transaction’s origin is ensured, and it also helps thwart money laundering activities. For a good measure, the Alias Output’s address can be turned as an unlock condition for basic outputs, too.
Lastly, the Stardust upgrade lets the minting and transfer of non-fungible assets on Layer 1 protocol via NFT Outputs. This is no different to how fund transfers work in the Alias Ouput wherein efficient and transparent transactions are ensured.
Such a feature gives way for NFTs to unlock identities, which can be advantageous to businesses representing or trading these digital assets. IOTA, however, generally discourages the utilization of this function for human identities.
The new Identity 1.0 falls in line with the IOTA Foundation’s vision of “Digital Autonomy for Everyone.” Overall, it allows flexibility to users as to how they govern their identities within the decentralized system of the protocol, and could provide new use cases for IOTA 2.0 moving forward.