IOTA decentralized identity framework reaches Alpha release on new blockchain VM

The convergence of digital identity management and public blockchain infrastructure continues, as firms seek novel but reliable ways to establish digital trust.

The latest to experiment with the recipe for secure, decentralized, scalable digital ID is value transfer protocol IOTA, an open-source distributed ledger technology (DLT) and cryptocurrency designed for the Internet-of-Things (IoT), created in 2015 and overseen by the IOTA Foundation, a non-profit registered in Germany.

A post on the IOTA blog announces the Alpha release of its decentralized identity framework, IOTA Identity, which “brings self-sovereign identity (SSI), verifiable credentials, and privacy-first digital interactions to the upcoming IOTA Mainnet.” IOTA Identity has migrated from the Stardust VM to the MoveVM blockchain virtual machine, which provides a more secure and flexible environment for smart contracts.

“IOTA Identity ensures data integrity on an immutable ledger while keeping verifiable credentials (VCs) off-chain for privacy and user control,” the post says. “Cryptographic verification ensures authenticity, while standardized formats enable seamless interoperability. Whether for personal credentials, business transactions, or IoT authentication, IOTA Identity fosters cross-platform trust with a user-centric model.”

The idea is for the IOTA Identity framework to serve as a “universal layer of trust for the internet,” which “enables digital identities, fosters trust-building through verifiable credentials, and ensures seamless interaction among different entities.”

The scheme is based on SSI and W3C Decentralized Identity Standards, and uses decentralized identifiers (DIDs) to enable individuals, organizations, and devices to create, own, and control their digital identities, secured by cryptographic keys. Public blockchain infrastructure in the form of a decentralized and permissionless ledger guarantees that anyone can join to add and validate transactions, and that identity proofs remain publicly auditable and resistant to censorship.

IOTA’s DLT offers a new spin on the standard model, using a directed acyclic graph (DAG) to store transactions on its ledger, instead of a chain of blocks like Bitcoin and Ethereum. It shows some flair in naming the DAG transaction settlement and data integrity layer “the tangle.” The system does not rely on mining and allows for transactions to be issued to the network at no cost.

The Wikipedia entry on IOTA says it “promises to achieve the same benefits that blockchain-based DLTs bring – decentralization, distribution, immutability and trust – but removes the downsides of wasted resources associated with mining as well as transaction costs.”

“However,” it continues, “several of the design features of IOTA are unusual, and it is unclear whether they work in practice.”

The protocol has aso faced allegations that its tangle is not truly decentralized because it requires a central “coordinator node” to operate.

It also has its defenders. Walt.id is a provider of digital identity and wallet infrastructure for developers, which has partnered with the IOTA Foundation on past projects. It says “IOTA is particularly interesting because of its work with public authorities like the European Commission, its strong community as well as its unique properties that result from IOTA being a DLT but not a blockchain, such as gasless/feeless transactions. Moreover, the IOTA identity framework is based on open standards for decentralized identity like W3C DIDs and W3C Verifiable Credentials (VCs).”

In 2024, the Web3 identity product built by the IOTA Foundation, walt.id, IDnow, Bloom Wallet and HAVN was selected for the European Blockchain Sandbox.

Regardless of its merits, while IOTA’s goals are similar to many working in the space – to support secure value and data transfers – its approach offers an illustration of how various components of the biometrics and digital identity ecosystem can be combined and recombined to create new iterations. And it is likewise a reminder that there will likely never be one killer app, monopolizing system or universal layer of trust for digital identity, but a complex ecosystem of interrelated technologies and use cases.

Article Topics

blockchain  |  decentralized identifiers (DIDs)  |  digital identity  |  digital trust  |  identity management  |  IOTA Foundation  |  IOTA Identity  |  self-sovereign identity  |  verifiable credentials  |  W3C