What is digital identity? Definition, examples, and protection

What is digital identity?

Digital identity, or online identity, is a collection of data points that can be used to identify a specific person online. This includes personally identifiable information (PII) like full names and home addresses, personal and work email addresses, Social Security numbers, login credentials to accounts, work IDs, or bank details. Digital identity is used to verify attempts to access sensitive information pertaining to that person.

Digital identity can also extend beyond individuals, applying to institutions and devices. They have their own identifiable traits, like serial numbers, IP addresses, and digital footprints that can be used for identification, much like an individual’s unique details. It’s a way to secure access to work resources and increase device protection.

Examples of digital identity

Some aspects of digital identity overlap with what we use to identify a person physically. However, it can also include information that can only be accessed and used online, like login details, browser cookies, or device cache.

Personal information used for a digital identity includes:

• Full legal name, date of birth, and Social Security number (SSN).
• Biometric data, like fingerprint or face ID.
• Email addresses, usernames, and passwords.
• Driver’s licenses, passports, ID numbers, and other digitized documents.
• Bank account and insurance details.
• Purchase history related to the individual.

For organizations and specific employees, digital identity expands to include:

• Company registration numbers.
• Employee ID numbers.
• Electronic signatures.
• Flash drive IDs.
• Dedicated login credentials.
• Corporate banking information.

Non-human digital identity can vary depending on the device or software in question and includes:

• IP addresses.
• Certifications and licenses.
• IMEI numbers.
• Media access control (MAC) addresses.
• Chip identifiers.
• Device or software registration numbers.

Unlike physical identification, digital identity methods are more dynamic. They also often overlap with physical traits, like using a combination of facial recognition with digitized documents. However, they’re usually not an equivalent or a replacement for physical identification documents.

How does digital identity work?

Digital identity works by taking all available information about a specific person, organization, or device online and using it to create an equivalent digital representation that could only be traced back to them. Verifiability is the crucial angle — anyone could have a username “user123,” but only in combination with a precise password and email address, registered on a precise website, can it be traced back to the actual person behind it.

Although username-and-password combinations are the easiest form of digital identity, they can be targeted by cyberattacks and data breaches. To secure the users’ information, service providers may set up additional steps to verify the digital identity in question. For instance, once you enter your precise login credentials into a website, it can require you to provide additional identity authentication data, like scanning your fingerprint or entering a one-time code generated by an authentication app. Once the website confirms that the information is a true match, you can access the service as a verified user.

Digital identity can be tied to specific privileges, especially in a workplace setting. Employees may be required to have a specific identity authentication token, like an ID card or a flash drive, that they use to prove their digital identity. Based on their identity, they’re assigned a certain level of privileges. For instance, administrators and managers may have access to more resources based on their verified role. These permissions can be adjusted if the employee’s role changes and are tied directly to their workspace digital identity.

Why is digital identity important?

Digital identity matters because the information it pertains to can be used to accurately pinpoint any person in the digital world and connect that data to their real-life identity. It can be used as a security measure to prevent unauthorized actors from gaining access to sensitive information that they otherwise don’t have the privilege to see.

Some countries, like the UK and Australia, require users to provide proof of digital identity to access websites that are restricted to children. Although some countries use fully digitized IDs, others require other photos of physical documents or facial recognition to prove users’ age and identity.

Common types of digital identities

Although digital identity typically concerns individuals and organizations, it can also cover inanimate objects and digital services.

Personal digital identity

Personal digital identity is the most frequently used type in everyday life. Users need a digital identity to access individual accounts, like social media or e-commerce. They can rely on designated ID apps, login credentials, and authentication tools to verify themselves.

Corporate digital identity

Corporate digital identity can be seen as a secondary identity, typically controlled via identity and access management (IAM) systems. Employees use it to prove their identity relative to their workplace rather than for individual activities. They use credentials to access dedicated company accounts, employee ID numbers, or access tokens like flash drive ID cards.

Government digital identity

Government digital identity is a form of ID issued by a state to its citizens. It can act as a digital equivalent of a physical identification document. Using a government digital identity, users can access governmental, legal, financial, and healthcare services online. Some states that support online voting and petitioning also use government digital identity to verify and authenticate votes and signatures.

Machine digital identity

Machine digital identity applies to hardware devices that can be traced individually. Each device has a serial number or a key that’s uniquely assigned to it. Machine digital identities are useful for organizations to keep track of devices. For instance, if a corporate phone or laptop is stolen, its unique key can be used to identify it once discovered. However, machine identity can also be useful for individuals to keep track of and protect their personal devices.

Cloud identity

Cloud digital identity is required to ensure secure access to digital resources and is more common in a corporate environment. Employees and devices need to pass robust verification mechanisms to access cloud-based resources. Cloud identities are often used to manage access permissions and employee privileges.

Application or software identity

Similar to cloud identities, software identities grant users access to specific applications based on their access permissions. They use login credentials to verify identities and generate individual sessions. For example, if an organization has multiple licenses to the same software, each user’s access is unique based on the license they hold.

Use cases for digital identity

Digital identity is required online more often than it might seem. It allows service providers to recognize verified and legitimate requests, process sensitive information, and ensure that access to your personal data is sufficiently protected.

• Online banking and financial transactions. To access financial services and make transactions, you need to verify that you’re the owner of the bank account. Typically, this requires a dedicated authentication app that verifies your login attempt and finalizes the transaction.
• E-commerce account creation and payments. E-commerce services are closely tied to your banking operations. First, you need an account with unique login credentials and your home address information for billing and delivery purposes. You also need to verify your payments as legitimate with your bank using your digital identity.
• Access to healthcare records and telemedicine. Medical information is protected under HIPAA, and healthcare service providers must ensure confidentiality and secure access. You need to provide your personally identifiable information to access your medical records.
• Digital signatures and document verification. Digital signatures are a legally binding method to sign and verify documents digitally. To create and access a digital signature, you need to log in to a service like DocuSign using your personal details. This will ensure your digital signature is uniquely tied to your identity.
• Smart city infrastructure. Using digital identification, people can receive personal digital public transport tickets, access public services like libraries and archives, or register for local elections.
• Border control and travel documentation. Digital identification can help fast-track travel processes, like issuing visas and electronic travel authorization (ETA), or accessing flight and train tickets. Those from EU member states can use biometric passports for quicker border control checks.

Benefits of using digital identities

Digital identities offer a convenient, flexible, and secure way for users to authenticate themselves and access their personal information. Using a digital identity simplifies verification processes online, allowing you to provide reliable and verified information about yourself to access your personal records, handle your finances, or renew your documents.

Digital identities can simplify secure access to shared company resources without concern of overstepped privileges. Each employee has access permissions tied to their digital identity, ensuring they only access the resources they need, and the permissions can be flexibly adjusted to align with new responsibilities. It can act as an anti-theft measure because each device has its own unique identity, which can be traced back in the case of theft or sabotage.

As a security method, digital identities help shield sensitive information from identity theft attempts. Digital identity access is often tied to additional protective measures like two-factor authentication or biometrics to ensure only the person with access to these measures can log in and view sensitive information related to their identity. Having digital identity access in place helps organizations more effectively adhere to regulatory compliance requirements, like NIST or HIPAA.

Digital identity adds flexibility and streamlines processes like passport or driver’s license renewals, visa applications, and personal account management. Users can decide their preferred access management methods and optimize how they handle access to their accounts and resources. They also help workplaces streamline collaboration and support remote and hybrid workers through easier login processes.

Digital identity vs. related concepts

Digital identity covers a broad list of identifiers, leading to people often using this term interchangeably with others. However, in some cases, digital identity might only cover a fraction of what you want to imply, and understanding the difference between other identity-based concepts can help avoid misinterpretation.

Digital identity vs. user account

User accounts can contribute to a person’s digital identity. For instance, to verify identities on different platforms, users can log in via different accounts, like their email, bank, or social media.

A user account can act as a point of vulnerability for one’s digital identity. If an account is compromised, for instance, because its password is breached, a cybercriminal may use this stolen data to impersonate the user and access their digital identity under false pretenses.

Digital identity vs. personal information

Personal information is a contributing factor to a digital identity. It’s both the information needed to use a person’s identity and the information accessed through identity verification. Personal information includes the user’s real name, Social Security number, email address, financial information, and other data that can be used for verification. However, it also extends beyond uniquely identifiable features — the user’s personal opinions, correspondence, and browsing history are considered personal information but might not work as proof of digital identity.

Unlike digital identities, which can apply to devices and software, personal information is a uniquely human factor. Furthermore, the personal information about a user as an individual and an employee overlaps and is considered part of one dataset, whereas personal and work digital identities are typically split.

Digital identity vs. digital ID

Although digital ID may appear as a simple abbreviation of digital identity, it actually stands for digital identification (sometimes also known as electronic identification or eID) and refers to specific digitized documents that an individual can have. A digital ID is not a universally implemented method and is only recognized as a legal means of identification in some countries, which support digital identification for documents like passports or driver’s licenses. On the other hand, digital identity can be used more flexibly online to access different services. It is a more generic concept and includes non-legally binding verification methods.

What are the risks related to digital identity?

Digital identity requires careful access management practices. Mishandling of this information can increase the risk of identity theft, data breaches, and other cybercriminal activity.

• Privacy risks. Digital identity carries some risks of privacy breaches. Centralized digital identity information could cause concerns about unauthorized surveillance and exploitation. Furthermore, in organizations, identity and access management can make employees feel extensively monitored.
• Device reliance. Many digital identity verification methods, like biometric identification or multi-factor authentication, require additional software. If a user doesn’t have their authentication device on hand, they’re unable to prove their identity to access their personal data.
• Data mishandling. Digital identities deal with highly sensitive information, and mishandling it could lead to serious data incidents, like unauthorized access and breaches.
• Technical errors. Instances where two different people use similar or the same login credentials or share the same legal name can lead to unintentional data exposure to the wrong individual. Technical errors can also impact devices and software if activation keys, certificates, or IP addresses overlap or if the service provider accidentally issues a duplicate registration number.
• Biometric vulnerabilities and issues. Many digital identity methods rely on biometric authentication. Unlike passwords, biometric data can’t be replaced once breached, which can increase the risk of identity theft.
• Increased likelihood of targeted cyberattacks. Individuals who have access to highly valuable data can become deliberate targets of cyberattacks aimed at their digital identities.
• AI-based threats. Generative AI can be used as a tool in cyberattacks to imitate biometric data pertaining to a person’s appearance. Cybercriminals can use deepfakes and falsified recordings for facial and voice recognition to pretend to be another user and gain access to their accounts, or use AI to automate password generation for brute-force attacks.

How to protect your digital identity

Your digital identity is unique to you, which makes it a valuable target for cybercriminals. Follow a few easy security practices to keep your sensitive data protected and identify the signs of identity theft.

Use strong authentication methods

Always ensure you use strong and unique passwords that only you know for identity authentication. For additional security, switch on two-factor authentication (2FA) whenever possible. Use an authenticator app or biometrics and avoid SMS verification, which is prone to SIM spoofing attacks.

Monitor your digital identity regularly

Track the activity of your most valuable accounts. Check for unauthorized login attempts and password reset requests. Do not authenticate any attempts to access your account that don’t come from your own phone or computer. If you notice suspicious active sessions, if possible, log out of all devices via security settings.

Keep your device registration numbers in a safe location so that if they get stolen or breached, you can use this information to regain access and verify they belong to you.

Protect your personal information online

Don’t grant anyone access to your digital identity, whether it concerns your personal or work information. Keep your accounts private to protect your personal information and prevent accidental exposure of sensitive details or spear phishing attempts that take advantage of your public data. Do not share work accounts or devices with external partners without permission.

Be aware of phishing and scams

Social engineering attacks are efficient at stealing user information without their knowledge. Keep an eye out for different types of phishing attacks targeting your phone number or email inbox. Always ensure you use trusted apps and open official websites to access your data. Learn how to spot a phishing email and avoid interacting with suspicious content. Don’t download or open unfamiliar files that may contain malware.

Keep your devices up to date

To keep hardware and software digital identities secure, always keep your operating system and apps up to date. Install security patches to prevent cybercriminals from exploiting vulnerabilities. Consider upgrading devices that no longer support security updates. Keep your software licenses up to date and avoid using older versions, which are more prone to security issues.

Use identity theft protection services

Managing different identities manually is unsustainable in the long term. To simplify this process without compromising your security, consider setting up an identity theft protection service like NordProtect. It monitors your personal information, like your Social Security number, email addresses, and credit card details, and alerts you if it detects any suspicious activity. If you become a victim of identity theft, NordProtect can assist you with the recovery process through expert support and financial reimbursement.

The future of digital identity

Digital identities are increasingly being used for personal and professional identification. More countries opt to implement digital identity management into legal authentication, allowing for more flexible access to online services. With more countries implementing digital authentication policies for data privacy reasons, it’s likely that more verified authentication methods will emerge.

Although digital identities can streamline workflows and simplify granting access permissions, the risks must be addressed before legally binding identification becomes more mainstream. Digital identity management services will likely need to focus on identity theft protection for centralized user data. In the meantime, digital identity remains a balancing act between user convenience and data privacy.