New database sheds light on decentralized identity projects across the world

For years, companies and experts have been lauding the possibilities of decentralized digital identity (DID). Detailed insights into this industry, however, have been limited – up until now.

On Monday, the world’s largest database of decentralized identity projects was unveiled in Zurich, Switzerland by investment firm Key State Capital.

The Web of Trust Map reveals that much of the world’s governments have jumped on the decentralized ID trend, hoping to allow their citizens more control over their personal data. Nearly 60 percent of the 117 countries developing digital IDs are also working on some form of decentralized digital ID, the data showed.

“We’re specifically mapped decentralized ID project with some government support or endorsement, because otherwise it’d be just way too much to map, although we’ll try to do that down the line,” Thibault Serlet, partner at Key State Capital told Biometric Update.

The data also showed that digital identity has become a goal for governments in almost every part of the world: 59 percent of countries are developing both decentralized and centralized ID, 24 percent are developing only centralized IDs, while only 18 percent of countries are not developing digital IDs at all. None of them, however, are focusing only on decentralized ID, adds Serlet.

Key State Capital describes itself as the only angel syndicate with a focus on decentralized identity, verifiable data and digital identity for legal entities. The company has backed self-sovereign identity (SSI) projects such as Cheqd and Evernym, with the latter acquired by Avast in 2021.

The company created the database and is making it free to use to make the decentralized ID ecosystem more mainstream and recognizable, explains Serlet. Each entry contains general information such as pilots and related public and private entities but also technical information which are sometimes hard to obtain such as details on interoperability and privacy.

However, aside from the exciting data, the database has also laid bare the disappointments of the decentralized ID push. Many analyzed pilots turned out to be short lived even though they tended to be conducted through governments. The data also showed that projects are changing frequently, leading to the conclusion that the industry is still trying to figure out what works and what doesn’t.

Another disappointment has been the lack of interoperability, the capability which is supposed to make sharing data from digital ID wallets more streamlined and ease integration with various services.

“There’s not really a lot of interoperability,” says Serlet. “Everything is completely siloed and things are getting more siloed because as the progress becomes more established, there’ll be more and more closed ecosystems.”

From Bitcoin to government

Despite the hurdles, the market for decentralized IDs is expected to grow. Analysis from market research companies such as Precedence Research predict that the digital ID industry could grow to $203.5 billion by 2034. And by 2035, between 25 and 35 percent of all deployed digital identity systems will be decentralized, Key State Capital says.

“We’re basing this simply off the number of programs that governments are involved in,” says Serlet.

Key State Capital wants to play a role in this growth. The investment syndicate currently has seven members based internationally while the company is in the process of incorporating itself in Switzerland.

Aside from Cheqd and Evernym, it has so far invested in U.S.-based firms such as HealthKERI, Provenant and Credential Master, later acquired by Salesforce. Serlet says that the company is focusing on startups with very specific technological requirements, including zero-trust technologies.

“We want to invest in technologies that are decentralized and that are highly privacy resistant, and that are scalable,” he says. “And it turns out that a lot of these simple blockchain ledger projects, do not meet these criteria. They’re platform locked – unless you get everyone on the same blockchain, they don’t work.”

Key State Capital’s interest in decentralization stems from its beginnings: The company started its work in 2018 as digital asset trading platform Titan Block. Its founders were early Bitcoin and cryptocurrency investors. Over the years, however, many of them concluded that the crypto industry is heading towards heavy regulation and decided to help governments adopt the technologies that underpin blockchain and web3.

“The big area where this is happening right now, outside of finance is digital identity,” says Serlet, adding that digital IDs are being used in supply chains, finance, healthcare and even defense.

“We’re looking at a couple of defense investments very soon, and we think it’s going to be sort of the Trojan horse by which this technology spreads to the broader industry,” says Serlet.

Article Topics

decentralized ID  |  digital ID  |  digital identity  |  investment  |  Key State Capital  |  Web of Trust Map