Comparing Centralized vs. Decentralized Approaches to Identity Management

Comparing Centralized vs. Decentralized Approaches to Identity Management
Comparing Centralized vs. Decentralized Approaches to Identity Management

Identity management is vital to control user’s access & preserve their digital identity. In this article, we will compare the centralized and decentralized approaches to identity management.


Does your company handle distant employees who require cloud access to company resources? Or does your company allow clients to create accounts that streamline their payment and order information? 


When managing people who need access to multiple types of data to accomplish their work or purchase a product, you will require a solid set of standards to assist you in implementing access controls and safeguarding your information systems from cybersecurity risks. 


Identity and Access Management (IAM) technologies are intended to accomplish this.


What is Identity Management?

Identity management (IdM), or identity and access management (IAM), guarantees that only authorized individuals can access the technology resources required to execute their job tasks. 


It encompasses policies and technology that contain an organization-wide process for adequately identifying, authenticating, and authorizing individuals, groups of individuals, or software applications using qualities such as user access rights and constraints based on their identities.


An identity management system prevents illegal access to systems and resources and prevents enterprise or protected data exfiltration. 


It generates alerts and alarms when unauthorized personnel or programs attempt to gain access, whether from within or beyond the business perimeter.


Identity management systems secure software and data access and an enterprise’s hardware resources, such as servers, networks, and storage devices, from illegal access, which might lead to a ransomware assault. 


Identity management has grown in relevance over the last decade due to increasing global regulatory, compliance, and governance regulations to protect sensitive data from exposure. IdM and IAM systems are often part of IT security and management. 


Data management and identity and access control systems for the wide range of devices users rely on to execute business operations, from phones and tablets to desktop PCs running Windows, Linux, iOS, or Android, are widely accessible.


IdM and IAM are frequently used interchangeably, although identity management is more concerned with a person’s identity (or username) and the roles, permissions, and groups to which that user belongs. 


IdM also focuses on identity protection using various technologies such as passwords, biometrics, multi-factor authentication, and other digital identities. 


This is often accomplished through identity management software apps and platforms.


How Does Identity Management Work?

Enterprises often use a user management component and a central directory component, such as Active Directory for Windows, Apache Directory Studio, or Open LDAP for Linux systems, as part of an overall IAM framework encompassing access management and identity management.


The user management component is responsible for admin authority delegation, maintaining roles and responsibilities for each user and group, provisioning and de-provisioning user accounts, and password management. 


Some or all tasks, such as password reset, are often self-service to lessen the load on IT professionals. The central directory is a repository for all company user and group data. 


As a result, one of the primary functions of this component is to synchronize the directory or repository across the company, which can include on-premises as well as public or private cloud components. 


This allows for a unified picture of users and their rights in a hybrid cloud or multi-cloud infrastructure at any time and from any location. Two access components are also included in an IAM framework. 


Sign-on (including single sign-on) difficulties, managing active sessions, and providing robust authentication via token or biometric device are all addressed by authentication. 


Authorization determines whether a specific user, instrument, or application should be permitted access to a resource by using roles, attributes, and rules in a user record.


Since we have a basic knowledge of identity management, we will now delve into the main topic of this article, comparing centralized and decentralized approaches to identity management. 


What is Centralized Identity Management?

Centralized identity management is a framework for centrally storing and managing users’ identification data. 


It offers a safe method for identifying, authenticating, and authorizing users with access to a company’s digital assets.


Users may access all the resources and applications they need to conduct their tasks with centralized IAM by entering only one set of login credentials. 


By eliminating the need to know and keep distinct login IDs and passwords for each resource, the user experience improves, and the danger of cyberattacks decreases. 


The recent Uber security incident highlights the importance of enhanced security measures, such as centralized IAM, in preventing hackers from utilizing stolen credentials to access corporate resources and sensitive data. 


Centralizing access restrictions reduces the risk of threats by providing IT staff with greater visibility into user activity and system resources. 


Employee onboarding and offboarding can be automated, making access grants and revocations simple. 


How Does Centralized Identity Management Work?

The identity component of centralized IAM manages and stores identity data, such as each user’s login credentials, responsibilities, and permissions. 


Storing this information in a centralized repository facilitates provisioning and de-provisioning and allows IT teams to monitor users’ login activity across all resources, independent of location. 


Teams with increased visibility can discover dangers faster and stop them from spreading. 


The access management component manages the authentication mechanisms needed to authenticate a user’s identification, such as single sign-on (SSO) or multi-factor authentication (MFA). 


It also addresses the authorization processes that decide whether a user can access a resource.


Benefits of Centralized Identity Management

Centralized identity management makes storing and sharing login information and permissions for multiple people easier. Other benefits are:


  • A unified user experience: Using a single set of credentials reduces friction, eliminates the need to remember numerous login/password combinations, and reduces the number of password resets.
  • Consistency: Save data consistently and with fewer errors across all platforms. Automatically log and audit access and user activities.
  • Provisioning and de-provisioning automation: Provision new users rapidly and with fewer human errors. Deprovisioning removes a user from all platforms simultaneously, eliminating zombie accounts and preventing bad actors from posing a threat. 
  • Streamlined threat mitigation: When visible breaches are more accessible to detect and isolate.


Here are some challenges of the centralized identity management approach.


Challenges of the Centralized Identity Management Approach 

While centralized Identity Management improves security by implementing tighter controls that prevent unwanted access, there are better methods than this one. 


The single identity store is frequently cited as the most concerning aspect by opponents of a centralized approach. Using a single set of credentials results in a single point of failure. 


A cyber criminal who successfully hacks into a user’s account may acquire access to all resources the user is authorized to utilize. 


While this issue is troubling, firms can reduce risk by employing robust authentication mechanisms such as multi-factor authentication (MFA) or biometrics.


We have seen what centralized identity management is all about; let us proceed further into understanding the decentralized identity management approach.


What is the Decentralized Identity Management Approach?

The decentralized Identity management approach gives individuals complete control over their credentials and personal data, which are saved in a digital wallet. 


The digital wallet acts as a middleman, protecting personal data and the individual’s privacy. 


A decentralized identification (DID) can be a randomly generated string that contains no personal information, further safeguarding an individual’s privacy.


Individuals with decentralized identities have complete control over the credentials or personal information given by each organization that verifies their identity.


DIDs are effective identities since a third party verifies users’ credentials and personal information. Consider the case of someone whose DID is a cryptographically signed driver’s license credential. 


To hire a car, the individual might authorize the auto rental company to access their credential, which the company would then validate. 


Similarly, a person may enable their wallet to certify to an alcoholic beverage company’s website that they are above the age of 21. 


The digital wallet might verify other personal information, such as addresses, academic degrees, employment history, government IDs, and financial account numbers.


Blockchain is typically used to power decentralized identity management systems. Each transaction is stored in a blockchain containing only DIDs and no other personal information. 


Authenticated credentials are likewise based on cryptographic keys rather than passwords; therefore, password management and password-based attacks are avoided.


Benefits of Decentralized Identity Management Approach

Some benefits of the decentralized identity management approach are;

  1. More secure and private method of handling identity
  2. Fewer accounts are required 
  3. Verified credentials
  4. Delegated responsibilities for handling PII
  5. Organizations are less likely to be attacked
  6. Password issues have been resolved


More secure and private methods of handling identity

The identity of a user, including when and with whom it is shared, is under the individual’s control. 


DIDs only require specified personally identifiable information for verification, minimizing the amount of PII that could be exposed during a data breach.


Fewer accounts are required.

Users do not need to create different accounts for each service when using a digital wallet and DID.


Verified Credentials

The digital wallet’s information has previously been validated for correctness and signed by reputable third-party sources, potentially speeding up verification processes.


Delegated Responsibilities for Handling PII

Some privacy duties are addressed because organizations only receive accurate PII that the individual authorizes them to use. 


Organizations do not keep or manage DIDs, thus decreasing their obligations to protect PII and preserving user privacy.


Organizations are less likely to be attacked

Organizations with decentralized identities may appeal less to bad actors since they maintain less user data.


Password issues have been resolved

Password management issues and password-based assaults are reduced because DIDs are based on cryptographic keys rather than passwords.


Decentralized Identity Management Approach Challenges

Decentralized identification is still a developing technology. Before it may be widely used, the following issues must be addressed:

  1. Understanding what decentralized identity is
  2. DIDs are managed by individuals 
  3. Organizational infrastructure changes
  4. Understanding the concept of a reliable source
  5. Lost revenue


Understanding what decentralized identity is

Education is essential; most people need help understanding blockchain, how it works, or how it protects identities.


DIDs are managed by individuals 

Individuals are exclusively responsible for the security and privacy of their information, which raises the following concerns: What information should each organization receive? What will happen if my digital wallet is hacked?


Organizational infrastructure changes

Currently, systems are built around centralized identity. Adopting new infrastructure to support decentralized identification would be costly regarding acceptance and scale use.


Understanding the concept of a reliable source

There are still questions about standardization and who decides whether a source is reliable. Standards must arise to establish who or what can be regarded as a reliable/verifiable source.


Lost Revenue

Many organizations favor centralized IDs because they can keep users’ data and follow user behavior online. Organizations need to have this gathered information to sell when using DIDs.


Final Thoughts 

The digital era has given rise to two distinct identity management models: centralized and decentralized. 


Control and ownership of user data are held by centralized models, which are regulated by a single authority, such as a business. 


They provide a consistent user experience across platforms, but they represent more dangers in terms of large-scale data breaches and less portability across platforms. 


Decentralized systems, conversely, provide consumers control over their data, promote greater privacy through cryptography, and promote interoperability across many platforms. 


Both systems offer distinct benefits and challenges to firms and individuals alike.


Choosing between centralized and decentralized identity management is a philosophical issue as well as a technological one. It addresses critical issues concerning control, privacy, security, and the future of digital relationships. 


The decision could influence cost, innovation, and consumer trust for organizations. Individuals’ digital freedom, privacy, and online experience may be impacted. 


Finding a balance that protects user rights and enables seamless digital interactions will be critical as technology progresses. Both systems provide vital insights into creating such a future; combining their capabilities may be the best option.