The XRP Ledger (XRPL) reached a key milestone on October 30, 2024 with the activation of the Decentralized Identifier (DID) Amendment, ushering in a new phase of user-controlled digital identity.
The new feature, known as XLS-40, adds a layer of security and privacy to transactions on XRPL by allowing users to create self-sovereign identities that are cryptographically verifiable and independent of any central authority.
Decentralized Identifiers (DIDs) and their role in XRPL
DID is a unique decentralized identifier that allows users to own and manage their digital identity without relying on a central authority. This structure complies with World Wide Web Consortium (W3C) specifications and makes DIDs persistent, globally resolvable, and compatible across multiple blockchain networks.
According to Mayukha Vadari, who helped develop the code for XRPL’s DID standard, these identifiers function similar to digital fingerprints, providing a unique and verifiable ID.
Each DID is associated with a DID document that includes encryption keys, validation methods, and service endpoints. This document enables verifiable credentials (VC) to prove user identity while giving users control over their personal data. The DID document is referenced on-chain via a two-way link, and both the DID and the document mutually verify each other, ensuring authenticity and preventing forgery.
Verifiable credentials and their potential uses
For the XRPL ecosystem, DID alone is only part of the identity solution. Verifiable credentials (VC) play a key role in fully validating a user’s identity. VC is a tamper-proof, cryptographically secure credential issued by a trusted authority, allowing users to share proof of identity without putting their personal data at risk.
In an exchange on Twitter, Vadari pointed out that VC could be important in areas such as preventing election fraud, as it enables secure identity verification when combined with DID.
VCs on XRPL can enable a wide range of applications, including KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance, access to decentralized finance (DeFi) applications, and secure digital transactions. By combining DID and VC, XRPL aims to provide a decentralized and user-controlled alternative to traditional ID solutions.
Ripple CTO reaffirms XRP’s role in network security
Meanwhile, Ripple CTO David Schwartz answered questions from the XRP community regarding the network’s dependence on XRP. Schwartz emphasized that XRP remains essential to XRPL’s security as it acts as a safeguard against spam attacks.
For a public ledger to resist spam attacks, there needs to be something missing to fund transactions so that attackers can’t sink the system with endless garbage. XRPL uses XRP for this purpose only. Unless the rules change, nothing can run on XRPL without XRP.
— David “JoelKatz” Schwartz (@JoelKatz) October 27, 2024
He explained that requiring XRP for transaction fees prevents malicious users from flooding the network with excessive transactions.
“For the public ledger to resist spam attacks, there needs to be a scarcity to fund transactions,” Schwartz said, adding, “Unless the rules change, nothing can run on XRPL without XRP. I can’t,’ he added.
This statement reassures XRP holders about the long-term utility of the token, especially as Ripple’s stablecoin Ripple USD (RLUSD) continues to develop. XRP supporters have previously expressed concerns that the introduction of RLUSD could reduce demand for XRP in cross-border payments. However, Schwartz and Ripple executives made it clear that the stablecoin is intended to complement, not replace, XRP within the XRPL ecosystem.
The future of DID in XRPL and potential use cases
The launch of DID on XRPL is expected to bring multiple benefits to the ecosystem. Decentralized identifiers provide a secure user control mechanism for managing digital identities. This is becoming increasingly important as more services and applications migrate to blockchain-based platforms.
With XRPL, DID can streamline identity verification for DeFi applications, online transactions, and digital document signatures. This development is in line with broader industry trends that emphasize privacy and user control over personal data.
The addition of DID positions XRPL as a competitive platform for identity solutions in Web3, where decentralized identity management is becoming a growing priority. As more applications adopt the DID standard, XRPL is likely to see increased user engagement, especially from individuals and organizations interested in privacy-focused, self-sovereign identity solutions.
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Kelvin Munene Murithi
Kelvin is a renowned author with expertise in cryptocurrencies and finance, and holds a bachelor’s degree in actuarial science. Known for his sharp analysis and insightful content, he has a strong command of the English language and excels at conducting thorough research and providing timely updates on the cryptocurrency market.
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