Decentralized Identity Management
Sector: Tertiary sector · Industry: Cloud and hosting services · Organisation: Civic · Maturity level: Concept
Decentralized identity management uses blockchain technology to enable secure and self-sovereign management of digital identities. The system solves the problem of centralized identity databases that are vulnerable to hacker attacks and data misuse. Companies can thereby conduct identity verification more securely and efficiently, while users retain full control over their personal data.
Documentation status
- Project status: Concept
- Evidence: Evidence medium
- Editorial review: Ufuk Avci, 15 April 2026
Description
Self-Sovereign Identity (SSI) is the concept of designing digital identities to be decentralised and user-controlled. The W3C DID standard (Decentralized Identifiers) was published as an official web standard in 2022; Verifiable Credentials are the carrier system for verifiable proofs.
Today's digital identity: Each platform (Google, Facebook, LinkedIn) manages its own identities and data; users have no control. SSI model: The user has a wallet with their DID (decentralised, self-controlled identity URL on the blockchain); authorities and institutions issue Verifiable Credentials (digital ID, driving licence, university certificate) stored in the wallet; the user decides which attributes to share with whom (Zero-Knowledge Proof: proof that one is over 18 without revealing the exact date). EU Digital Identity Wallet (eIDAS 2.0, pilot phase ongoing): All EU member states must provide a national EUDIW by 2026. EBSI (European Blockchain Services Infrastructure): EU blockchain backbone for educational certificates and identity proofs. Germany: Federal government is working on the German EUDIW implementation. Applications: digital driving licence, e-prescription issuance, age verification without data disclosure, bank account opening without physical ID.
Perspectives
B2B — organisations perspective
Companies can accelerate KYC processes with SSI-based Verifiable Credentials, conduct GDPR-compliant identity checks, and directly accept EU Digital Identity Wallet credentials — without a central identity database.
B2C — consumers perspective
Users gain full control over their digital identity with SSI wallets — selective data sharing, no data loss in platform hacks, compatible with the EU Digital Identity Wallet.
Employees perspective
Employees benefit from simplified login processes and increased data security, as they no longer need to disclose personal data for every service. The decentralised solution reduces the risk of data leaks and gives users more transparency about how their data is used.
Benefits
General
- Enhanced security through decentralised storage prevents single points of failure and reduces the risk of large-scale data breaches.
- Improved privacy allows users to decide for themselves which information they want to share with whom.
- Reduced compliance costs through automated validation processes and GDPR-compliant data processing.
B2B — organisations
- Cost savings through reduced administrative effort in identity checks and automated compliance processes.
B2C — consumers
- Increased data control enables consumers to share their personal information selectively and for limited periods.
Employees
- Simplified authentication through single sign-on functionalities without disclosing sensitive data to third parties.
Challenges
General
- High technical complexity in implementation requires specialised blockchain developers and comprehensive security audits.
- Acceptance issues among users who need to get used to the concept of self-managed digital identities.
B2B — organisations
- Integration into existing IT systems can be complex and costly, especially with legacy applications.
Employees
- Training effort for employees in handling new authentication methods and security protocols.
Technology foundation
The solution is based on public blockchain technology, which enables transparent and immutable storage of identity data. Smart contracts automate the validation and management of identity information without requiring a central authority.
Tags
Identity management, Data protection, Smart contracts, Self-Sovereign Identity, Cybersecurity