Identity information includes first and last name, date of birth, nationality and national ID number, passport number, insurance number, driver's license, etc. This data is issued by centralized entities (governments) and stored in centralized databases (central government servers).
According to the identity security company LifeLock, in 2017, more than 16 million cases of identity fraud and theft were registered in the United States. According to statistics, an identity was stolen on average every two seconds that year. Forgery on this large scale does not only include the forgery of identity documents such as passports and birth certificates, but also includes all cases of abuse of other identities, such as forging educational certificates and hacking personal files.
Another thing is that the authentication processes of non-governmental organizations raise concerns about privacy.
But blockchain technology has a solution:
Governments can easily eliminate this problem by storing sensitive information on a decentralized blockchain ledger.
A blockchain identity management system uses a zero-knowledge proof algorithm for identity verification. This algorithm is a method in which, using a private blockchain, the government stores individuals’ identity information on the blockchain and assigns each person a specific code. Other private and government agencies then receive confirmation of identity simply by entering this unique code. In this method, no personal information details are shared, but only a valid and unfalsifiable confirmation is issued by the government agency and via the blockchain, containing limited information. This solves many privacy issues, as only certain agencies are allowed to receive personal details, and individuals do not have to provide institutions with their full identification documents for verification and expose themselves to identity fraud.
An example of personal identity security using blockchain
Asian countries such as China, Malaysia and Singapore are at the forefront of using blockchain in the field of personal identity security. The Singapore government will issue educational certificates on the blockchain platform from early 2020 to prevent forgery of educational certificates. Obviously, this will be an important step towards improving the level of service quality and meritocracy.
The use of a blockchain tracking system in the fight against money laundering
Money laundering is simply a method of making money obtained from illegal or criminal sources appear legal. There are various methods of money laundering, and today one of the main ways is digital currency. Investing in digital currency transactions is also a quick and easy way to evade taxes, because huge amounts of Bitcoin transactions can be transferred without any control.

Countries such as India have issued a complete ban on digital currency trading due to frequent money laundering and the government's inability to control it.
Blockchain has created a fully proven anti-money laundering [AML] mechanism to address this issue. In the next section, we will discuss this issue with an example.
Why is the banking anti-money laundering process ineffective?
The authentication process in banks is mandatory. When opening an account, all the financial and identity records of the account holder are checked and at the end, the anti-money laundering commitment is signed by the account holder. However, money laundering is rampant. Because for every law, there is a way around it. Every year, by erasing and distorting information, by creating fake and misleading information, large-scale money laundering is carried out all over the world.
Combining the two authentication methods and anti-money laundering methods using the power of blockchain, decentralization, transparency and immutability, can reduce the risks and challenges associated with this process.
What is the blockchain anti-money laundering [AML] tracking system?
Blockchain is decentralized and immutable. By creating an anti-money laundering platform using blockchain, money tracking becomes very easy and transparent. The data is immutable and any attempt to destroy or distort the information fails. Any hacker trying to attack the network would have to defeat more than half of the nodes with a 51% attack to gain control of the data, which is a very costly and unthinkable endeavor. Therefore, the data can be fully monitored and observed by regulators such as banks.
Blockchain Transparency in Combating Money Laundering [AML]
Blockchain maintains a history of all transactions on its network. Cases such as hacking or 51% attacks are traceable because every event is stored on the platform. Banks can be notified with a smart contract to report any suspicious activity, such as large transfers of money from accounts, before it is too late.
Smart contracts can be configured to extract data and generate reports in the shortest possible time. Automated processes can easily generate a complex report and speed up the process.