Microsoft announced last week that they are using the Bitcoin blockchain in a new project to increase online security.

The project – called “Identity Overlay Network”, or “ION” for short – is being developed by a partnership between Microsoft and the Decentralized Identity Foundation.

The ION Project

ION was announced last Monday in a release co-authored by Vice President of Project Management, Alex Simons, and Senior Program Manager, David Buchner. Simons and Buchner are both members of Microsoft’s Identity Division.

We believe every person needs a decentralized, digital identity they own and control, backed by self-owned identifiers that enable secure, privacy preserving interactions, Simons wrote in the release. This self-owned identity must seamlessly integrate into their lives and put them at the center of everything they do in the digital world.

According to the release, most of our “digital identifiers”, like email addresses, are provided by companies or organisations. This puts someone else in control of our digital identities. However, ION is working on using blockchain to create Decentralized Identifiers. These “DIDs” would represent an individual online, but would be under the control of that individual rather than Microsoft, Google, etc.

Our goal is to create a decentralized identity ecosystem where millions of organizations, billions of people, and countless devices can securely interact over an interoperable system built on standards and open source components, Buchner wrote in the release.

The problem is that no blockchain currently has a high enough transactional volume to support this kind of community. Microsoft and the Decentralized Identity Foundation are working on “Sidetree” to solve this problem. This protocol aims to batch documents into single blockchain transactions. This would allow a higher volume on blockchains without changing their transaction rate.

Sidetree and ION are still in early phases of development. However, Microsoft hopes that making them available to the public will help to speed up the process. Because everything is open source, this release is like an interactive beta. It gives developers data to work with but developers can also interact with the code and point out the issues.

The Key Players

Microsoft is one of the original computing companies. They create hardware as well as software and cloud based solutions like Outlook email, Microsoft Office, and Skype.

The Decentralized Identity Foundation is a group of companies, organizations, and companies working to create a decentralized identity ecosystem. Members and partners include Microsoft, Mastercard, IBM, and Blockstack.

As mentioned above, all of the code involved in ION including the sidetree protocol is open source and freely available on Github. That means that anyone can contribute to the product without being a member of Microsoft or the DIF.

Is Microsoft Making a Coin?

With the rise of altcoins, there has been speculation about the next major company to create its own coin. In the release, however, Microsoft said that coins are not a goal of their product. That’s in part because DIDs are not meant to be traded or exchanged.

In this way, ION is more significant than another coin. It’s adding a use case to blockchain’s portfolio.