How Can Your Digital Identity Be Decentralized on Web3 Using Blockchain and NFTs?

Today, gadgets, applications, and third-party services are often used to connect the personal
information about people that makes up their digital identity. Users have little control over the
personal information they choose to disclose or how they want to share it, possibly making it
more susceptible to cyberattacks and data breaches. The introduction of Web3 has altered how we communicate online. Applications built on the blockchain function independently and without intermediaries, resulting in a decentralized Internet where any user may be the sole proprietor of their data. Users of Web3 may personalize their profiles and save personal information in a single account that they can use to browse social networking sites and log in to their cryptocurrency wallets.

Decentralized identity: What it is?

A developing idea called decentralized identity contends that only the person whose identity the
data pertains should own it. Users are in charge of creating and managing their digital identities
independently of outside service providers. In particular, decentralized digital identification
(DDID) is a decentralized system that uses blockchain technology to rebuild the present
centralized identity management.

Verifiable Credentials (VCs), a standard for digital credentials, may tokenize a user’s identity to
allow keeping it in a non-custodial wallet, for instance. Users can disclose all or parts of their
identification and personal information to organizations like the government, banks, or schools.

Additionally, storing data in a single location will be more straightforward. Another example is
self-sovereign identities (SSI), which emphasizes authenticated credentials connected to
decentralized management of real-world verification data.

How Does Web3’s Decentralized Identity System Operate?

Users have total control over their data online, thanks to decentralized identification. Using
technologies like NFTs and blockchain, individuals from diverse backgrounds may express
themselves and engage in novel ways on Web3. They may play a key role in propelling and
welcoming users into a new realm of liberation and empowerment. Everyone can design their
NFT avatar to represent themselves, and each. NFT Marketplace development has a unique
identity that cannot be duplicated. This enables safer communication among online groups.

Decentralized identification often uses non-custodial identity wallets or other types of
decentralized storage to retain an individual’s decentralized identifiers (DIDs). A wallet that
enables users to construct their decentralized identity and control which third-party service
providers have access to it might be an app or a browser extension.

Users are the exclusive owners of this scheme’s corresponding public and private cryptographic
keys. Specific wallets could use other forms of authentication to protect user data. For instance,
self-sovereign identities (SSIs) store user credentials on the blockchain with real-world
verification information like biometrics. Additionally, it enables individuals to maintain their

online personas without using intermediaries. More crucially, to guarantee the security of
personal data, SSIs keep the data in non-custodial wallets that are only accessible by individuals.

Users of apps that support employing decentralized identification for authentication may sign
transactions using their private key or biometric information to confirm their identity in the
metaverse. The service provider would then search the blockchain for the corresponding unique
DID utilizing the user’s decentralized identity.

Soulbound Tokens (SBTs): What Are They?

Vitalik Buterin, the co-founder of Ethereum (ETH), has proposed Soulbound Tokens (SBTs),
which are non-transferable NFTs that are exclusively owned by a single person and are firmly
attached to digital wallets (Souls). SBTs function like accomplishment badges and may be used
to hold many pieces of personal data, including resumes, educational credentials, and
memberships in clubs, among other things.

They are easily identifiable by the public, making the exhibition of fraudulent certificates almost impossible. For instance, a Web3 corporation looking
to hire software professionals may use SBTs to verify a candidate’s qualifications, while an artist
could issue NFTs from their Souls to vouch for their creations.

Users may get advantages using SBTs that alter how we perceive social identities in the actual
world. These coins may be used to establish a person’s identity and reputation, thereby fostering
the development of reliable connections in decentralized settings.

The development of SBTs indicates that Web3 is more than just financialized assets. They
represent user credentials and could provide the online world a feeling of real interpersonal
connections and communities. SBTs, for example, define a person’s qualitative characteristics,
such as accomplishments, skills, affiliations, etc. They have the potential to transform how
people communicate with one another on the blockchain by acting as a hybrid of online social
media accounts and resumes.

The Advantages of Decentralized Identity

Instead of relying on a single server login, decentralized identity gives individuals complete
control over their digital identity. Users may more easily exercise control over their metaverse
identity and biometric data in the Web3 environment since they no longer need to submit a
username and password when using an identity wallet.

Thanks to decentralized identity, users may choose which portions of their data to share with
different service providers. This gives customers back control over their data management,
making it theoretically simple to utilize a single identity wallet.

Blockchain technology for decentralized identification also offers high levels of security and
anonymity. Users are shielded from hacking and identity theft since data can only be unlocked
and seen with the proper digital signatures. Compared to centralized servers, decentralized
identification data maintained on a blockchain is immutable and more secure. Other parties can not change users’ records since data captured on the distributed network cannot be removed
or modified.


Decentralized digital identification is one of the newest technologies that might assist in
advancing the Web3 revolution. Users may enjoy improved security and data protection in the
metaverse and have easy access to all their accounts without remembering several usernames and
passwords. Organizations may simultaneously provide people with customized services while
protecting their privacy.

With start-ups and large companies already adopting the technology, such as Microsoft’s new
product Entra, which enables users to authenticate, protect, and manage all forms of identities
and access requests could materialize sooner than anticipated. Decentralized identities will
take time to execute worldwide, necessitating collaboration and coordination between enterprises
and governments.

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