Original article: https://polkadot.com/blog/decentralized-digital-identity/
By Joey Prebys
Compiled by: OneBlock+
Every time you go online, you’re probably asked to provide a bunch of personal information: your birthday, your phone number, even the last four digits of your Social Security number. But where does this data end up?
In today's digital economy, personal data is a kind of "currency". Companies make money from it, governments use it for archiving, and hackers may even leak it. And most of the time, you have to hand over far more information than necessary in order to "prove that you are you."
But Web3 offers another possibility: an identity system that you truly own. You no longer need to log in with Google or upload your passport. Decentralized Identity (DID) allows you to take ownership of your identity and flexibly decide what information you want to share and with whom.
In this article, we’ll walk you through how decentralized identity works, what possibilities it unlocks, and why it’s becoming increasingly important.
How Decentralized Identity Works
You can think of DID as a "digital passport number" that you create yourself. It is not assigned by a third party like an email address or government ID card, but is generated by you and recorded on a decentralized network such as the blockchain. It will not be revoked and does not rely on any single platform or institution.
"Verifiable credentials" are electronic authoritative certificates you have obtained, such as driver's licenses, graduation certificates, proof of age, etc. They are issued by trusted institutions and stored in your digital identity wallet. This wallet is like a safe App vault, and DID is the core anchor of your identity. Each credential is connected to a specific piece of information about you.
What are its advantages? The most important thing is: no longer relying on centralized databases, reducing the risk of data leakage ; you are no longer bound to a certain platform, and the verification process can be completed instantly through encryption technology.
This means you no longer have to upload your ID or fill out a bunch of information just to sign up for a new platform. The system is designed to be interoperable: one identity, all the way to the airport, hospital, email, and you always have control over your data. You can just prove "I'm over 21" without revealing your birthday, or prove "I have a degree" without having to forward your entire transcript.
From ENS to Now: The Awakening of Identity in Web3
The idea of "owning your own digital identity" has actually been around for a long time. For example, during the NFT craze in 2021-2022, millions of people registered their own ENS (Ethereum Name Service) domain names. Addresses like yourname.eth are not only easy to remember, but have also become a personal brand.
At that time, "grabbing a name" on the chain was like planting your own flag in the wasteland of Web3. Everyone wanted to have a certain experience that Web2 login could not provide: a "digital presence" that was autonomous, independent, and not collected.
The popularity of ENS also hints at a deeper need: users want to control their online identities and the flow of data. At the same time, the rise of PFP (avatar) NFTs and anonymous identities also shows that identities can be made public without revealing real information - some anonymous people can even give speeches at conferences with just nicknames and avatars.
All of this is the harbinger of a new kind of identity: one that’s cross-platform, decentralized, personal, and private. And now, this identity is no longer just an avatar or nickname, but a tool and infrastructure that is gradually moving towards the real world.
Decentralized Identity in 2025: KILT’s Practical Path
When it comes to decentralized identity solutions that are truly implemented, KILT Protocol is undoubtedly one of the most active projects at present. It is an identity protocol built on Polkadot that allows organizations to issue and verify credentials, which are stored by users in their own wallets. Identity can be verified without uploading sensitive data.
KILT has been applied in multiple real-world scenarios:
Games: Players can use KILT to prove the ownership and reputation of game assets without revealing their real identities
Enterprise: Used to optimize KYC processes and credential verification, accelerate user onboarding, and reduce compliance risks
DePIN Project: Identity verification for connecting participants in physical and digital systems
AI tools: Verify the source of content based on the KILT identity system and establish the foundation of "real human existence"
Across these applications, the common advantages are clear : users can verify their identities without losing control of their data, and trust in this system is not only verifiable and transferable, but also privacy-preserving by default.
Challenges of decentralized identity and issues that are still being solved
Although the underlying architecture of decentralized identity has basically taken shape, there is still a long way to go before it can be truly popularized. Inconsistent standards, unclear supervision, and user experience need to be improved, which may make ordinary users feel that the threshold is high when they first come into contact with it.
But there are also developments worth looking forward to. For example, the World Wide Web Consortium (W3C), a global network standards-setting body, has officially recognized DID and Verifiable Credentials as network standards. This means that decentralized identity is no longer a "cutting-edge experiment" in a small circle, but an important part of the future direction of network architecture .
Of course the problem still remains:
Are privacy regulations keeping up?
Can users trust systems they don’t fully understand?
Can the login experience be as simple as Google's, but without requiring data in exchange for convenience?
Why Polkadot: A future built on digital sovereignty
Gavin Wood, founder of Polkadot, has always emphasized that digital identity is the core key to a more open and fairer Internet . His vision is "self-sovereignty" - users control their own data instead of letting the platform handle it. At the Decoded conference in 2024, he talked about a series of important concepts: privacy first, selective disclosure, and decentralized individuals.
“The point of decentralization is that individuals can act autonomously… That’s why we need to build an infrastructure that allows people to exist in the digital world without relying on centralized platforms.” — Gavin Wood, Decoded 2024
KILT is the embodiment of this concept. As a native rollup on Polkadot, KILT provides a scalable, secure, and interoperable identity credential issuance and verification system. It leverages Polkadot's shared security, low fees, and multi-chain connectivity to make decentralized identity construction more sustainable and applicable.
How Polkadot enables decentralized identity at scale
Polkadot’s multi-chain architecture and neutral design make it particularly suitable for identity infrastructure. Builders are using KILT to meet real-world needs across industries, from reusable KYC to privacy-preserving identity layers in AI, DePIN, and gaming. Because KILT runs in the Polkadot ecosystem, credentials can be moved between services and communities, allowing continuity without sacrificing privacy.
For Polkadot, identity is not a side feature; it is fundamental to the network’s long-term vision: a more private, interoperable, and user-controlled internet.
Conclusion: From login account to digital self
Today’s login systems are designed for platforms, not people. They trade data collection for access, sacrificing privacy and autonomy. Decentralized identity is rewriting this paradigm . It puts users back in control of their identities — deciding what to share, when to share, and with whom to share.
Although it is still in its early stages, the ecosystem has begun to take shape. From standard setting to practical application, there are already cases in AI, DePIN, and gaming. Web3 is not just tokens and technology, it is also a transformation process that gives people "digital identity sovereignty". The future of identity will be sovereign, interoperable, and user-controllable, and Polkadot is making this future within reach.
