# Blockchain-based digital identity for government agencies

> Government agencies are exploring the use of blockchain technology to digitize identification documents and credentials. The technology aims to create tamper-proof, decentralized identity solutions that enable cryptographic verification without central storage. The market for decentralized identities is estimated to reach $103.3 billion by 2035.

**Sector:** Tertiary sector · **Industry:** Public infrastructure and utilities · **Organisation:** Department of Homeland Security (DHS) · **Maturity level:** Concept

Canonical URL: https://www.sapientblock.com/en/use-cases/department-of-homeland-security-ausweise-digital-faelschungssicher-ausstellen

## Documentation status

- **Project status:** Concept
- **Evidence:** Evidence high
- **Editorial review:** Ufuk Avci, 15 April 2026

## Description

Digital, blockchain-based IDs and identity documents are among the fastest-growing blockchain use cases. The core concept is Self-Sovereign Identity (SSI): instead of storing data centrally with the state or corporations, citizens control their identity data in a digital wallet.

The EU has established the legal basis with the eIDAS Regulation 2.0 (2024): all EU member states must offer an EU Digital Identity Wallet by the end of 2026. The wallet is based on W3C DID standards and Verifiable Credentials — technologies compatible with blockchain. EBSI (European Blockchain Services Infrastructure) is the EU's technical infrastructure for cross-border blockchain-based digital identities. In the USA: the TSA accepts Mobile Driver's Licences (mDLs) from participating states at security checkpoints. 84% of end users use physical and mobile credentials in parallel (market research data). Selective Disclosure is a key advantage: instead of showing the entire passport, one only proves being over 18 — without revealing date of birth, address or other data. DID market: 81.2% annual growth until 2035 to USD 103.3 billion (market research).

## Benefits

- Authorities and companies can reduce their administrative costs by up to 20 percent through automated verification processes.
- Citizens no longer need physical documents and have their identity proofs digitally available at all times.
- The technology offers increased security through cryptographic encryption and significantly reduces the risk of document forgery.
- Decentralised storage eliminates single points of failure and makes the system more resilient to cyberattacks.
- Users gain full control over their identity data and can decide which information to share.
- Administrative staff can carry out verification processes up to 50 percent faster and focus on more complex tasks.

## Challenges

- Authorities must make significant investments in new IT infrastructure and staff training.
- Interoperability with existing systems requires extensive technical integration and can incur high implementation costs.
- Acceptance by users and authorities is crucial for success, as 84 percent of people still use physical documents in parallel.
- Administrative staff must familiarise themselves with complex blockchain technologies and learn new workflows.

## Technology foundation

Blockchain-based digital identities use decentralized databases to cryptographically encrypt and distribute identity data. The technology allows users to control their identity keys themselves and share them with verifiers without a central authority needing to store the data.

## Sources

- Mobile credentials reach critical mass with 84% of end users still using physical credentials alongside mobile versions
- TSA accepts mobile driver's licenses from participating states at checkpoints
- EU member states to offer EU Digital Identity Wallet with regulated security levels by end of 2026
- DID industry projected annual growth of 81.2% until 2035 to $103.3 billion
- [DHS S&T: S&T Invests in Innovative Blockchain/DLT Technologies (Fokus: Preventing Forgery and Counterfeiting of Certificates and Licenses)](https://www.dhs.gov/archive/science-and-technology/news/2020/06/29/st-invests-innovative-blockchain-dlt-technologies)
- [DHS SBIR Success Story: Digital Identity Protection (Digital Bazaar, blockchain-basierte Credentials und Wallets)](https://www.dhs.gov/science-and-technology/publication/dhs-sbir-success-story-digital-identity-protection)