MicroStrategy unveils Bitcoin-based decentralized identity protocol with Ordinals-inspired technique

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MicroStrategy has announced the development of a decentralized identity solution on the Bitcoin blockchain. The protocol, dubbed MicroStrategy Orange, adopts a Bitcoin Inscription DID method, similar to the Ordinals technique, to manage Decentralized Identifiers (DIDs) using Unspent Transaction Outputs (UTXOs) for control. Michael Saylor, the company’s co-founder and executive chairman, unveiled the innovation at the Bitcoin For Corporations conference on May 1.

“The Bitcoin Inscription DID method (did:btc) uses the bitcoin blockchain exclusively to store and retrieve DID information. UTXOs on chain are used to control DIDs. Inscribing data in the witness of transactions allows for greater extensibility and verbosity when creating DID documents, while reducing fees and block space consumed,” as noted in a draft of a potential specification (the document) of the new solution on MicroStrategy GitHub.

According to Saylor, MicroStrategy Orange is an open-source initiative that does not rely on sidechains and is capable of processing up to 10,000 DIDs in a single Bitcoin transaction. The system aims to simplify the adoption of DIDs for organizations and individuals, offering a way to manage online identities securely and pseudonymously.

“The goal of this method is to deliver trustless, tamper-proof, and long-lived decentralized identities using only the public bitcoin blockchain as a data source, while enabling full compatibility with the [DID-CORE] specification and forward compatibility for future extensions,” stated the document.

DIDs offer a pseudonymous way to manage online identities, distinct from real-world identities, enhancing privacy. The MicroStrategy Orange suite includes the Orange Service for organizations to issue DIDs, the Orange SDK for developers, and Orange Applications like “Orange For Outlook” for digitally signing emails.

The onboarding process involves an invitation from an organization, DID creation, and inscription on the Bitcoin blockchain, ensuring the data is permanent and tamper-proof.

According to Cezary Raczko, MicroStrategy executive vice president of engineering, MicroStrategy Orange’s vision is to integrate DIDs on Bitcoin with a broader “verifiable credential ecosystem.”

In other words, anyone could verify the authenticity of these credentials across various applications without relying on a central authority. The verification would happen by checking the information on the Bitcoin blockchain, which is known for its immutability and security.

DIDs could be used to verify user identities on social media platforms, potentially enabling a more secure, user-controlled, and decentralized way to issue and verify credentials, Raczko highlighted a potential use case of the new protocol.

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