Self-sovereign identity goes national: Inside Bhutan’s Ethereum transformation

Bhutan is transitioning its National Digital Identity (NDI) system from Polygon to Ethereum, with completion expected by Q1 2026, making it the first country to anchor its national identity system on Ethereum.
The move emphasizes enhanced security and leverages Ethereum's decentralized, battle-tested infrastructure for sovereign identity management.
The NDI system is built on Self-Sovereign Identity (SSI), allowing citizens to own and control their digital credentials (e.g., licenses, certificates) via secure wallets, sharing only necessary information without exposing sensitive data on-chain.
Bhutan's small population and digital ambitions, including Bitcoin mining and a focus on Gross National Happiness, provide a unique advantage for implementing innovative systems.
Other countries like Brazil and Vietnam are also exploring blockchain for digital identity, but Bhutan's use of a public blockchain sets it apart.
This initiative aims to prioritize individual data sovereignty, security through decentralization, and interoperability with Ethereum's ecosystem for future innovations.

Compiled by: Vernacular Blockchain

The Himalayan kingdom is betting on Ethereum as the foundation for the world’s first national identity system built on a public blockchain — and in the process, reimagining the relationship between citizens and their data.

This week, the Himalayan Kingdom of Bhutan made waves in the blockchain world when it announced its decision to migrate its national digital identity system from Polygon to Ethereum. The move, scheduled for completion by the first quarter of 2026, will make the Himalayan nation a pioneer in leveraging public blockchain infrastructure for sovereign identity management.

The presence of Ethereum co-founder Vitalik Buterin and Ethereum Foundation Chairperson Aya Miyaguchi at the launch ceremony signaled its significance beyond a simple technology migration. As Miyaguchi noted in an X post, Bhutan became “the first country to anchor its national digital identity system on Ethereum,” marking a milestone in blockchain adoption at the national level.

Bhutan's embrace of blockchain for identity management wasn't sudden. Its National Digital Identity (NDI) system was first launched in 2023, when His Royal Highness The Gyalsey became the country's first digital citizen. Initially built on Hyperledger, the system transitioned to Polygon in August 2024, favored for its zero-knowledge protocol and the promise of scalability to handle high transaction volumes.

Now, less than a year later, Bhutan has once again turned to Ethereum. According to Jigme Tenzing, Secretary of Bhutan’s Government Technology (GovTech), the decision was primarily based on enhanced security: “By transitioning to Ethereum, we further strengthen the security of our digital identity.”

Ethereum is the world's second-largest blockchain by market capitalization and the leading platform for decentralized applications. Bhutan's choice of Ethereum demonstrates its long-term commitment to using battle-tested decentralized infrastructure to support critical national systems.

Understanding Self-Sovereign Identity

At the heart of Bhutan's NDI system is the concept of Self-Sovereign Identity (SSI), a paradigm shift in the way we think about digital credentials. Unlike traditional identity systems, where governments or corporations control your data, SSI empowers individuals to own and manage their own digital identities.

In practical terms, this means Bhutan's nearly 800,000 residents can store digital credentials, such as driver's licenses, educational certificates, and health records, in secure digital wallets they control. When accessing government services or proving their identity online, citizens can decide precisely what information to share and with whom, transmitting only the necessary credentials rather than handing over comprehensive personal data.

SSI provides users with greater autonomy over their personal information, enabling them to control who can access and use it, thereby offering a higher level of privacy protection because the data is no longer controlled by a centralized authority. The blockchain serves as an immutable record of credential issuance and verification, but crucially, sensitive personal data itself is not stored on-chain. Instead, the authenticity of the credential is verified through cryptographic proof without exposing the underlying information.

This architecture addresses several key vulnerabilities in traditional identity systems. Centralized databases create a "honeypot" for hackers: compromising a single system could compromise the identities of millions. The decentralized platform enabled by SSI allows users to provide specific details only to the verifying party through blockchain and verifiable credential technology, thereby reducing the risk of identity theft while adhering to current privacy standards.

Why Bhutan? A small country with big digital ambitions

Bhutan’s aggressive push into blockchain-based identity management might seem surprising for a small South Asian nation with a population of less than a million, but several factors give it a unique advantage in making this digital leap. Scale is an advantage here—with its compact population, Bhutan can implement and iterate innovative systems more quickly than larger countries burdened by legacy infrastructure and bureaucratic inertia.

Bhutan's willingness to embrace cryptocurrency and blockchain technology sets it apart from most countries. Bhutan has been actively mining Bitcoin using its abundant hydropower resources, transforming its renewable energy advantage into a digital asset. According to Bitbo, the country holds the sixth-largest Bitcoin reserves globally, holding 11,286 Bitcoins, valued at $1.28 billion; according to StrategicETHReserve, it also holds 495.44 Ether.

Bhutan's governance philosophy, guided by "Gross National Happiness" rather than GDP growth, creates space for experimentation with systems that prioritize citizen empowerment and data sovereignty over pure economic efficiency. The SSI system naturally aligns with these values of individual autonomy and trust-based governance. By establishing a national blockchain identity system, Bhutan is also positioning itself as a potential hub for blockchain innovation and testing in South Asia. Its NDI system could serve as a blueprint for other developing countries seeking to move beyond traditional identity infrastructure.

Bhutan's choice of Ethereum over other blockchain platforms reflects both pragmatic and philosophical considerations. As one of the world's most decentralized blockchain networks, with hundreds of thousands of validators, Ethereum offers security that makes it extremely difficult for any single entity to tamper with identity records. Its strong developer community and institutional adoption ensure the long-term stability required for a national identity system. Building on Ethereum also opens the door to interoperability with the vast ecosystem of decentralized applications, creating possibilities for future innovation in areas ranging from decentralized finance to digital governance.

Perhaps most importantly, as Miyaguchi elaborates, “Bhutan’s transformation reflects the original intention of Ethereum – to give individuals sovereignty over their data, build trust without central points of failure, and enable inclusive digital systems that are people-centric.” While Polygon offers faster transaction speeds and lower costs, when a country stakes its identity infrastructure on blockchain technology, it is the base-layer security and decentralization provided by Ethereum that ultimately matters.

Global context

Bhutan is not the only country exploring the use of blockchain for a national identity system, although it may be the first to adopt a public blockchain like Ethereum solely for this purpose.

Over 214 million Brazilian citizens are expected to use blockchain technology for digital identity, with Rio de Janeiro, Goiás, and Paraná states among the first to issue identity documents on a blockchain. The Brazilian government has introduced a blockchain network to strengthen data sharing security between the Federal Tax Administration and the Civil Identification Agency, supporting the tax administration's operations.

However, Brazil’s approach differs from Bhutan’s in scale and implementation. Bhutan is transitioning to a fully public blockchain (Ethereum), while Brazil’s system appears to be more focused on inter-institutional data sharing and may use more permissioned blockchain architectures.

Vietnam has launched a national blockchain called NDAChain for digital identity and records. The chain has 49 validator nodes and is jointly supervised by public institutions and large enterprises, aiming to serve the government and businesses.

NDAKey enables citizens to verify claims about their identity in real time, a crucial component in Vietnam’s fight against fraud, impersonation, and scams as its economy becomes increasingly digital.

Vietnam established a comprehensive national blockchain strategy in October 2024, aiming to create 20 major blockchain platforms and position the country among the top ten blockchain research nations in Asia. This represents a more systematic, government-led approach than Bhutan’s focused identity initiative.

A people-centric digital future

Despite the challenges, Bhutan’s commitment to blockchain-based identity management represents a reimagining of the relationship between citizens and government in the digital age.

As more aspects of our lives—from healthcare to finance to education—move online, the question of who controls our digital identity becomes increasingly crucial. Bhutan’s answer prioritizes individual sovereignty, security through decentralization, and transparency through an open blockchain infrastructure.

Whether other countries will follow Bhutan’s lead remains to be seen. But as the world watches this small Himalayan nation implement one of the most advanced national identity systems ever, one thing is clear: the future of digital identity is being written on the blockchain, one citizen at a time.

For Bhutan’s 800,000 residents, that future begins in early 2026 on Ethereum.