Microsoft Is Building Decentralized Identity Solutions on Bitcoin's Blockchain

Microsoft is currently working on an open-source project which involves developing decentralized infrastructure on the Bitcoin (BTC) blockchain.

Microsoft’s latest project, called Ion, will focus on developing protocols which allow different networks to communicate with each other.

Facilitating Communication Between Separate Networks

For instance, if you use your LinkedIn credentials to log into an Uber Conference meeting, then a communications protocol at the software layer would send your profile data (from LinkedIn) to servers used by Uber Conference’s program. The profile data received would then be used to verify users’ credentials.

Microsoft’s Ion platform is being developed to handle a similar verification process, however it will process the data between separate networks by using decentralized identifiers. Ion network users will be able verify, or prove, that they own their data - as they will also own the keys associated with their data.

In statements shared with Coindesk, Christopher Allen, an early crypto adopter and co-founder of the World Wide Web Consortium (W3C) Working Group for Decentralized Identity (DID) Solutions, said:

A lot of enterprise infrastructures use Microsoft products. So if they integrate this into any of their infrastructure products, they’ll have access to DID.

Microsoft Working On Key Signing And Validation Solution

Yorke Rhodes, a Program Manager at Microsoft’s blockchain-focused engineering team, confirmed that the tech giant had been working on a key signing and validation solution for the past year. Rhodes also mentioned that Microsoft’s software is compatible with public chains including Bitcoin and Ethereum.

According to Rhodes, Microsoft’s Ion platform has greater throughput than the blockchain network on which it is being developed. He also noted:

There are systems that we have at Microsoft that give you permissions in an enterprise context, a product called Active Directory, that we think [may] be able to recognize these DIDs as well.

As a founding member of the Decentralized Identity Foundation, Microsoft has been building various infrastructure-related products and services such as its Azure platform.

According to sources familiar with the matter, the Ion network will be moved from Bitcoin’s testnet to its mainnet at some point during this year.

Facebook's Management Not Interested In Decentralized Identity Solutions?

One of the main benefits of using DID, or a decentralized identity and data management system, would be that giant social networks such as Facebook or Twitter would not have complete control over users’ profile images and other personal information. The centralized network owners would be able to terminate accounts, but they would not be able to prevent users from keeping their personal data.

Interestingly, Rouven Heck, the Head of the DID project at ConsenSys and W3C member, revealed that Facebook’s management appears to be avoiding discussions related to decentralized identity solutions.

Rhodes said:

Facebook is the complete antithesis of consumer privacy. Their business model is based on the fact they can monetize data about you.

Meanwhile, Rhodes thinks open-source projects like Ion are inline with Microsoft’s current business strategy and that the tech giant also believes in the “philosophy of consumer ownership and consumer centricity.”

Bullish Bitcoin Investors Are Ignoring Institutional Bears

Neil Dennis

Bitcoin investors remained positive this week, despite data showing that bearish bets on the futures market had increased during the previous week.

Positioning data on CME Bitcoin futures showed that institutional managers held 14% more short positions in the seven days to Friday, June 21, than in the week before, according to the Commodity Futures Trading Commission (CFTC).

Futures trade allows investors to back an asset's losses as well as gains: short positioning means backing an asset to fall in price over a defined period.  The increase in the CFTC short position data on CME Bitcoin futures, therefore, would indicate growing bearishness by the larger institutional players.

Playing it by the Charts

They may have been playing it by the charts. The previous two tops occured in mid-May when the price of Bitcoin reached a high of $8,352 before falling back nearly $1,000, and then at the very end of May reaching $9,066 before falling back to $7,807.

Bitcoin's price performnace

The chart shows that in the week to June 21, when shorts on CME Bitcoin futures grew, Bitcoin pushed up above $10,000, in a chart pattern that might have led many to believe another pullback was imminent.

This drop, predicted by many institutional investors, never came, however, and private investors continued to back the Bitcoin rally. Indeed, the CFTC report showed that smaller investors continued to hold more long positions - backing the continued rally: investors with fewer than 25 Bitcoin futures contracts showed four times as many long positions than shorts.

Short Covering

This may help explain how the rally of the last couple of weeks gained momentum, as those on the institutional side joined the buying to cover their short positions.

Tanya Abrosimova, analyst for FXStreet, said:

Many experts believe that at this stage Bitcoin is driven by FOMO (fear of missing out), while the market repeats the situation of late 2017.

It is also likely that Facebook's announcement about the lauch of its Libra cryptocurrency caught the institutional shorts on the wrong side of the market. Since the Libra announcement on Tuesday, June 18, Bitcoin has gained more than 30%.

Abrosimova added:

Looking technically, Bitcoin has been growing strongly for eight days in succession, which is the longest period of uninterrupted growth since December 2017. As BTC/USD is trying to take out a new barrier at $12,500. Once it is out of the way, the next bullish target of $13,000 will quickly come into view.