This isn't by any means a new idea. In the US your driver's license is issued by your state, but it's accepted as identification by a whole variety of relying parties, not just the state and its agents. It's not just your driver's license, either; you likely have a relationship with multiple IdPs. For instance, I have a driver's license (issued by California) and a passport (issued by the US State Department), plus a variety of more specialized credentials which are arguably used for authentication/authorization, such as credit cards, library cards, etc. That's not really the state of play for Internet transactions, though, with the partial exception of Facebook Connect (discussed below).
In the simplest case, all the IdP does is attest to the fact that you have an account with them and maybe some weak indication of your identity, such as your claimed display name and an account identifier. There are a variety of systems of this type, such as OpenID, but by far the most popular is Facebook Connect. The way that Facebook Connect works is that you log into Facebook and then when you visit a Facebook Connect relying party, they are able to get your account information from Facebook, though that mostly consists of information you've given Facebook, so there's no real guarantee that for instance the name that Facebook delivers the relying party is your real name.
Even a simple system like this presents technical challenges, especially when it's implemented in the extremely limited Web environment (hopefully more on this in a separate post). First, there's the question of privacy: just because I have an account with IdP X and site Y is a relying party for IdP X doesn't mean that when I visit site Y I want them to be able to identify me. The more widely accepted an IdP is, the more serious this problem becomes; if every site in the world accepts my IdP, then potentially I can be tracked everywhere I visit, both by the IdP and by the relying parties. If we want to avoid creating a universal tracking mechanism (people often call this a supercookie), we need to somehow let users decide whether to authenticate themselves to relying parties via their IdPs. This creates obvious UI challenges, especially because there's plenty of evidence that users get fixated on whatever task they are trying to accomplish and tend to just click through whatever dialogs are required to achieve that objective.
The second challenge is dealing with multiple IdPs: in an environment where there are a lot of different IdPs and different relying parties accept different IdPs, then we need some mechanism to let relying parties discover which IdP (or IdPs) I have an account with. This is actually a little trickier than it sounds to do in a privacy-preserving way because the profile of which IdPs I support can itself be used as a user-specific fingerprint even if none of the IdPs directly discloses my identity to the relying party. Moreover, when I have a pile of different IdPs, I need to somehow select which IdP to authenticate with, which means more UI.
Real-Life Attributes and Minimal Disclosure
Once you get past a system that just carries an identifier—especially one that's unique but not really tied to any form of verifiable identity—life gets more complicated. Consider your driver's license, which typically has your name, address, age, picture, and driver's license number. When I go to a bar to buy a drink, all I need is to demonstrate that I'm over 18, but there's no reason for the bar to know my real name, let alone my address. In general, the more attributes an identity system can prove, the more useful it is, but also the more of a privacy threat it potentially is if any relying party just learns everything about me.
There has been a lot of work on cryptographic systems designed to allow people to prove individual properties to relying parties without revealing information that the relying party doesn't need to see (the term here is "minimal disclosure"), such as Microsoft's U-Prove. The idea here is that you will establish a whole bunch of attributes about yourself to one or more "claims providers". You can individually prove these claims to relying parties without revealing information about other claims. In the best case, even claims providers/IdPs don't get to know which relying parties you are proving claims to or which claims you are proving (e.g., the state wouldn't get to find out that you were proving your age to a bar.)
Making this work requires a lot of cryptography, though at this point that's pretty well understood. However, it also requires user interaction to allow users to determine which claims are to be proven to which relying parties. So, for instance, you would visit a site and it would somehow tell your Web browser which claims it wanted you to prove; your browser would produce some UI to let you agree; once you've agreed, your browser would cooperate with the claims provider to prove those claims to the relying party.1
Putting it Together
Putting the pieces together here, what NSTIC seems to envision is a federated identity system of users, IdPs, claims providers, and relying parties. As a user you'd be able to select your IdP/claims providers and as a relying party you'd be able to decide which of these you trust. The whole system would be glued together with by privacy-preserving cryptographic protocols. In the next post, I'll try to explain some of the challenges of actually building a system like this in the Web environment.
1. It's worth noting that if you don't mind your IdP/claims provider learning who you authenticate to and which claims you prove, then you don't need any crypto magic. This is basically the kind of system Facebook Connect already is.