The "National Strategy for Trusted Identities in Cyberspace (NSTIC)" program of the federal government will be tested in Michigan and Pennsylvania to see if using government-certified IDs on the Internet is a practical idea on a national scale.

The program has been in development for years and Michigan and Pennsylvania have been awarded some $2.4 million in federal funds to test the online ID system. News reports said Michigan received $1.3 million to pilot an automated system that validates identities online. Pennsylvania was offered $1.1 million to develop a similar program that involves multiple state offices.

Michigan will use the $1.3 million to test an automated system that validates identities online. The system is intended to replace the in-person proofing system used by persons looking to apply for state benefits.

Pennsylvania's pilot program combines automated identity proofing with federated use of credentials so the same token can be accepted for multiple programs without duplicating effort and personal data across departments.

NSTIC is a US government initiative announced in April 2011 to improve the privacy, security and convenience of sensitive online transactions. The government intends to achieve these aims in partnership efforts with the private sector, government agencies and other organizations.

What NSTIC intends to create is an online environment where individuals and organizations can trust each other because they identify and authenticate their digital identities and the digital identities of organizations and devices. It will offer, but not mandate, stronger identification and authentication while protecting privacy by limiting the amount of information that individuals must disclose.

In theory, the program will also help curb online abuse that costs the United States government billions of dollars a year due to fraud. The government believes this amount can be significantly cut with a new system that authenticates the people that use government programs and websites.