Could Decentralized Digital Identity Become the New Norm?

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By Lucas Stewart | 4Q 2022 | IN-6740

Self-Sovereign Identity (SSI) is an emerging digital identity scheme where the storage of sensitive data is anchored to blockchain or Distributed Ledger Technology (DLT). SSIs enable new levels of citizen privacy and may see growing implementation, specifically considering the September 2023 eIDAS revision that accommodates for SSI structures.

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The Emergence of Self-Sovereign Identities


Self-Sovereign Identity (SSI) is an emerging digital identity scheme that puts greater control of identity data into the hands of citizens. The mechanism by which this is achieved is through decentralizing identity data storage via blockchain or Distributed Ledger Technology (DLT). This moves beyond the traditional means of storage of citizen data for digital identities in a secure element—as is the case of many so-called federated identities. In such a case, governments (and private third parties where applicable) have full visibility of identity usage and can essentially see when, with whom, and how a citizen uses their ID. Decentralizing the identity from being housed within public structures can enable new levels of privacy. Using cryptographic proofs, SSIs enable selective attribute sharing, providing only the relevant elements of an identity credential for the specific verification use case. Additionally, and critically to the main notion of an SSI, governments do not see how these attributes are shared, with whom they are shared with, or when this occurs.

SSI Shows Potential, but Wide-Scale Adoption Is Speculative


The September 2023 eIDAS revision remains a key point of interest surrounding the digital identity space. Part of the reason behind the upcoming revision was to cater to criticism of the original regulation concerning citizen privacy and the potential abuse by governments. The original eIDAS detailed a European federated ID that rigidly followed the citizen, with high levels of government control, to the extent that there would be a potential for a citizen to have personal funds frozen if deemed appropriate by the government in question. This led to the upcoming eIDAS 2.0 revision to accommodate for the SSI structure for European IDs. This is a significant statement and is indicative of the acknowledgment of citizen’s needs and wants concerning digital identity. There is a growing cultural trend concerning decentralization, mirrored in finance through cryptocurrencies, and the ever-increasing requirements of data privacy and protection that SSIs would cater to. By extension, if an SSI adequately fulfilled citizens’ desires of digital ID, this could encourage further adoption as it would be beneficial to governments that want to achieve wide-scale digital transformation.

That being said, decisions of digitalization schemes ultimately lay with governments, and employing SSIs could be considered detrimental in terms of ceding data that was beneficial beforehand. Equally, it represents a somewhat radical change, and one that would require transformation to infrastructures and global standardization. This raises questions of whether SSI adoption will see major implementation. At this stage, what is sure is that the eIDAS 2’s support of SSIs can be considered a key indicator that this possibility is very real. Additionally, while currently implementations are few, there are existing blockchain and DLT identity projects—such as the case of Estonia that has utilized a blockchain back-end server for a number of years. Moreover, South Korea is looking to introduce an SSI structure for national ID by 2024, adding to a similar existing project for digital driver’s licenses.

SSI Market Opportunities


With the rapid expansion of government digitalization strategies, SSI represents an opportunity of significant potential should the technology take off and be adopted broadly. Those companies offering an established solution for SSI will be strongly positioned if this is the case, and research and development of solutions should be on the radar for digital ID implementors. At present, Apple’s mobile ID wallet takes a centralized approach; original equipment manufacturers including Google and Samsung are not expected to facilitate decentralized digital IDs in their upcoming offerings. For this reason, SSI potential could become an area of the market that can be cornered by existing key ID players, with a greater depth of expertise forming a foundation on which SSI solutions can be built.


Companies Mentioned