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Published: Sep 15, 2023 13 min read

Digital identity is a representation of who you are online. Like a driver's license or ID card, your digital identity contains all the information that makes you, well, you.

Keeping that information safe and private is crucial. But what makes up a digital ID is a lot more complicated than a driver's license, so it's important to understand the ins and outs of digital identity to protect yourself. Learning what a digital identity is and why it matters can go a long way to protecting yourself from identity theft.

What is a digital identity?

Your digital identity, or online identity, is a digital representation of who you are. It contains vital information unique to you, such as your account names, browsing data and even medical history. Unlike a physical ID card, there is no application or sign-up process to get a digital identity. Everyone who uses the internet in any capacity has some form of digital identity.

There are many types of digital identity. Some represent an individual, whereas others represent a company, partnership or machine. You can think of your digital identity as a footprint — the more personally identifying information (PII) you provide online, the more detailed and unique your digital footprint becomes.

While digital identities are complex, they aren't necessarily bad. Just like you need to show your physical ID to make a withdrawal from your bank, your digital ID verifies who you are when you log into your online bank account. Your digital identity also helps your apps and accounts integrate, tailoring your online experiences and making it easy to share information between accounts.

That said, a digital identity poses some risks. The more personal information is associated with your identity, the more vulnerable you might be to digital identity theft. That's why it's so important to understand and manage your digital identity to protect yourself online.

Personal information and attributes associated with digital identity

A digital identity comprises all the details and attributes that make your online presence unique. That includes browsing history, device information, location, spending habits, social media profiles and more.

Not all attributes associated with your online identity are strictly digital. Your digital identity might also be tied to your:

  • Social Security number
  • Banking information
  • Physical address
  • Medical history

These are examples of sensitive PII, or information encrypted through an app or website's user privacy services. Most sensitive PII you provide online is secured by passwords and data encryption, but that doesn't ensure its safety. It's important to control your digital identity online to ensure hackers can't access this crucial information.

Types of unique digital identifiers

Digital identifiers are the data points at the root of your digital identity. They're what links online activity to a specific user within a system. Everything you do online is linked to a digital identifier, and all those identifiers combined make up your digital identity.

A few common examples include:

  • Usernames and passwords: Many websites you use daily, such as search engines, social media or your online bank account, track your activity through your unique username.
  • Shopping or browsing history: Third-party data collection agencies may track your shopping history, which can create a unique profile of you even if you don't give them any information directly.
  • Birthdays: Some databases use your birthday as a personal identifier, often alongside other identifiers, such as your name and Social Security number.

Remember, these are examples of identifiers, not digital identity examples. Although digital identifiers like a username, birthday or Social Security number can be used as forms of authentication online, they don't make up your entire digital identity. In other words, just because your username and passwords are secure doesn't mean you're protected from digital identity theft.

What is digital identity theft?

Digital identity theft is a form of fraud that takes place online. It happens when a hacker assumes your digital identity to access your accounts and personal information or scam others. This kind of theft is quite serious because your digital identity verifies so many digital services.

Here are a few ways thieves might use your digital identity:

  • Accessing your credit card information and buying things in your name
  • Filling out rental or loan applications with your credit score
  • Stealing information from other people using your social media profile
  • Blackmailing you by using your personal information

Even if you know how to protect yourself from identity theft, your digital identity might still be vulnerable. Learning about digital identity security is essential to keep yourself safe, regardless of how much time you spend online.

How to protect your digital identity

Identity theft is on the rise, and cyber scams are getting more sophisticated as security concerns increase. An attack on your digital identity might not be as apparent as you think.

Fortunately, there are steps you can take to protect your identity online. Digital identity management can go a long way toward keeping your credit, bank account, address and other personal information secure. Below are a few tips for protecting your digital identity.

1. Use strong, unique passwords

Text-based passwords are the most common online authentication tool today. Although a strong password won't protect every aspect of your digital identity, it's a first step.

Ideally, your password should contain 12 or more characters and include uppercase and lowercase letters, numbers and symbols. It's best to avoid sequences (numbers or letters in order) and words with personal significance, such as a name or location.

On top of that, you should create a strong, unique password for every account. Reusing passwords leaves all your accounts vulnerable to hacking. A free password manager like Norton or Dashlane can help you generate strong passwords and store them in a secure vault, so you don't have to worry about remembering all of them.

2. Enable two-factor authentication whenever possible

For additional security, consider activating two-factor authentication whenever an app or website offers it. Two-factor authentication uses two methods of verification instead of just one. For example, you might have to provide a password and fingerprint identification to log into your online banking account.

This extra step helps protect against basic hacking attempts. It also helps keep your apps private if someone tries to log in on your device.

3. Be cautious when sharing personal information online, including social media

You should only provide sensitive information like your full name, address and Social Security number when a legitimate, high-security platform requires it. If a new website or app asks for this information, proceed with caution. Make sure you're on a trusted platform that will protect your data with encryption (cloud-based storage that guards against malware and hackers).

Remember that social media isn't 100% secure. You should never share sensitive information in a public post or a direct message. Even if you know the person messaging you, anyone who hacks either of your profiles could view that message thread. It's safer to call someone and give them the information directly.

4. Avoid suspicious emails and phishing attempts

Phishing attempts aren't always blatant. They might look like a regular email from a service you subscribe to. Here are a few tips to help you recognize a phishing scam:

  • The message starts with a generic greeting
  • The email is from an address you don't recognize
  • The message contains typos or unusual characters
  • The message asks you to click a link to update your personal information

If you're unsure whether an email is legitimate, the safest choice is to contact the company through their website or over the phone to verify.

5. Use a reputable antivirus, firewall and VPN software

Antivirus software will protect your device against malware, phishing scams and other attacks. Though these programs aren't 100% foolproof, they can go a long way toward protecting your digital identity, especially alongside other precautions, such as two-factor authentication.

Some of the best identity theft protection services include protection for multiple devices, VPN access and coverage in case you become a victim of identity theft. Some organizations also invest in digital identity blockchain to help protect identities in their databases. Blockchain technology uses a shared recording system, making information more difficult to hack.

6. Regularly back up your important data

If you store important personal or work data on your device, back it up with cloud-based storage. That way, you won't lose your data if your device has to be wiped or locked due to a virus. Cloud-based storage is generally safer than device storage, so back up your important data regularly and avoid saving sensitive information to your device.

Why is digital identity important?

If you implement the best digital identity protection strategies, your digital identity can help protect you from fraud. Think of it as an ID card — you don't want it stolen, but it helps you verify your identity and grants you access to things you need. As digital identity solutions become more prominent, having a secure, well-managed digital identity is increasingly important.

Authentication and access control in online services

Because your digital identity is unique to you, you can use it to gain access to certain online services. The most common example of this is a professional networking system.

When you log in to the networking system of your business, you are represented by a username, password and other information, such as your name and birthday. That digital identity tells the database who you are, which can automatically give you access to relevant data. The CEO of a company, for example, will have access to more data than a lower-level employee.

This access control eliminates the need for special passwords and verification codes. Because passwords can be stolen or hacked, digital identity verification is a safer solution.

Protection against identity theft and fraud

Digital identity authentication can also help a database identify when someone who isn't you tries to access your information. If a hacker can access your username and password without using your usual device or location, the system may flag their activity as suspicious. For example, if you make a credit card purchase in a new location that doesn't match your normal shopping habits, your online banking service might freeze the transaction and contact you to verify its authenticity.

In fact, digital identification might someday become the norm. Some states have launched digital identity cards stored in the cloud that provide authentication information without revealing unnecessary private details. For example, someone can use their digital driver's license to show a bartender they're over 21 without also showing them their address.

There's still a long way to go to make all forms of identity digital. Still, it could eventually be a safer solution than physical cards and IDs.

Summary of Money's what is digital identity and why is it important?

So, what is a digital identity? The answer is quite complex.

Your digital identity is how you represent yourself online. It contains vital information about who you are and may encompass multiple accounts, browsing data, shopping history and more. If you spend any time on the internet, you already have a digital identity.

Digital identities are important because they can be used to verify who you are and prevent fraud. Protect your global digital identity from theft by taking basic cybersecurity steps, such as setting a strong password and using two-factor authentication. A digital identity app or identity theft protection service can add an extra layer of security.

By safeguarding your digital identity, you can continue browsing, working and shopping safely.