Decentralized identity (DID)

Decentralized identity rests on two building blocks. Decentralized identifiers, a W3C standard, are globally unique IDs such as did:ethr or did:web that resolve to a document listing the public keys and services linked to that identity. Verifiable credentials are signed claims issued to that identifier, for example a diploma or proof of age, which the holder stores in a wallet and presents when needed. The holder, not a central database, decides what to share.

The model underpins self-sovereign identity projects, wallet-based logins such as Sign-In with Ethereum, the European Union's digital identity wallet and on-chain reputation systems. In crypto it is also used for Sybil resistance in airdrops and grant rounds, and for reusable KYC that avoids handing documents to every service.

Adoption is fragmented across competing methods and wallets. Losing keys can mean losing an identity unless recovery is designed in, and putting personal data or even hashes on a public chain can create privacy problems. A credential is only as trustworthy as whoever issued it.