MicroStrategy introduces Orange: A DID protocol based on Bitcoin

MicroStrategy, a US-based business intelligence and software company, has introduced its new decentralized identity protocol, Orange. This innovative protocol was announced on May 1 at the annual MicroStrategy World event in Las Vegas.

Orange stands out by using a new method using inscriptions on the Bitcoin (BTC) blockchain as ordinals to store information related to decentralized identities (DIDs). The protocol uses Bitcoin's Distributed Witness (SegWit) feature. It also allows documents to be created and updated with minimal restrictions on size and content.

Why is Microstrategy Orange different from other DID solutions?

During the segment entitled “Bitcoin Security”, Michael Saylor, co-founder and CEO of Microstrategy, explained the idea behind the Bitcoin protocol.

“Our vision is to provide a native decentralized digital identity of the Internet powered by Bitcoin. So, we want to use the open DID standard, and we want to use the open Bitcoin standard and put the two together… Why do we use Bitcoin? Well, it's fault-tolerant, it's censorship-resistant, it's the most advanced. It uses cryptography, it's much better than a lot of people's task managers and this federated system … it's open, permissionless, peerless,” Salor said.

Read more: Decentralized Identity and the Future of Web3: What You Need to Know

Saylor also highlighted that the protocol allows decentralized identities to be managed more efficiently, reducing transaction fees and blocking space usage – which are common concerns in blockchain operations. However, it is not yet clear when MicroStrategy will launch the Orange Protocol.

Based on information on their “unofficial draft” on Github, Orange's technology base is based on the Bitcoin script. Orange integrates DID data directly into the blockchain, unlike other DID methods that rely on external data sources or additional dependencies. This method ensures the durability and integrity of data while enhancing the overall functionality and future compatibility of digital identities.

For example, the Bitcoin Reference DID method ( did:btcr ) relies on referencing a URL to retrieve DID document data. Such a dependency can compromise the immutable nature of the blockchain if the content of the URL changes. Conversely, Orange stores additional information on-chain for a DID document.

Additionally, ION (did:ion) requires indexing all IPFS data referenced by Bitcoin transactions, which introduces additional external dependencies. Orange's use of the taproot script route shows transactions, allowing for the storage of arbitrary amounts of data on Bitcoin transactions in encrypted form. Therefore, orange can remove these dependencies.

Moreover, Orange improves security measures by separating the “wallet keys” used to sign Bitcoin transactions on-chain and the “subject keys” that authenticate the DID subject. This separation allows a third party to administer the DID on behalf of the subject or require multiple signatures. Thus, it provides an additional layer of security and control.

This move demonstrated MicroStrategy's continued support and involvement in the Bitcoin ecosystem. In early February, Saylor said the company was moving toward a Bitcoin development strategy.

“We see ourselves as a Bitcoin development company, which means we will do everything we can to grow the Bitcoin network,” he said during the company's fourth quarter earnings webinar on February 6.

Microstrategy's recent purchase of Bitcoin has further strengthened its long-term view on Bitcoin. BeinCrypto reports that MicroStrategy bought an additional 122 BTC this April for a total of $7.8 million.

The transaction increases MicroStrategy's holdings to 214,400 BTC, now worth more than $12.35 billion. With its holdings, MicroStrategy positions itself as a major player with more than 1% of the 21 million bitcoin supply.

Read more: What is Digital ID?

However, these positive developments did not immediately impact MicroStrategy's share price (MSTR). MSTR's closing price as of May 1 was $1,065.03. However, in the longer term, MSTR has rallied 180% this year, rising from $685.15 on January 2 to a high of $1,919.16 on March 27.