White House Launches Plan to Create a Trusted 'Identity Ecosystem' for On-Line Commerce

On April 15, the Obama Administration formally launched its National Strategy for Trusted Identities in Cyberspace (NSTIC), a plan to work with the private sector to develop a private market for secure identity credentials for the Internet.

The plan calls for establishment of an "Identity Ecosystem," in which consumers can choose to obtain "trusted" IDs from one or more private or public credential providers. Consumers can then use their credentials to prove their identity when they're carrying out sensitive transactions, like banking, while staying anonymous when they're not.

"By making online transactions more trustworthy and better protecting privacy, we will prevent costly crime, we will give businesses and consumers new confidence, and we will foster growth and untold innovation. That's why this initiative is so important for our economy," President Obama said in making the announcement.

The NSTIC system would work by creating a set of standards for privacy protection and interoperability of on-line credentials based on cryptography and other techniques such as multi-factor authentication. For example, student Jane Smith could get a digital credential from her cell phone provider and another one from her university and use either of them to log into her bank, her e-mail, her social networking site and so on, all without having to remember dozens of passwords. If she uses one of these credentials to log into her Web email, she could use only her pseudonym, "Jane573." If, however, she chose to use the credential to log-in to her bank she could prove that she is truly Jane Smith. People and institutions could have more trust online because all participating service providers will have agreed to consistent standards for identification, authentication, security and privacy.

Fully implemented, such a system would reap multiple benefits for businesses and consumers alike, officials said. Consumers would benefit from the increased security of the system and the reduced threat of fraud and identity theft, since their personal information would be less exposed and on-line transactions more secure. Businesses would benefit from reduced costs in managing and protecting client information, and could focus on service and new product development.

The April 15th White House announcement, "Administration Releases Strategy to Protect Online Consumers and Support Innovation and Fact Sheet on National Strategy for Trusted Identities in Cyberspace," is available online. Additional information on the National Strategy for Trusted Identities in Cyberspace (NSTIC) is available online.