Decentralized identity software is an identity management model where users own and manage their own credentials, rather than a centralized authority like a government or corporation.
Decentralized identity solutions are used for streamlining identity operations management and credential verification. This includes reducing user identity fraud, rapidly onboarding new users, reducing costs associated with provisioning and issuing digital certificates, offering end users a privacy-preserving identity verification method, and reducing security risks associated with centrally storing identity information, including regulated data such as personally identifiable information (PII).
Companies use decentralized identity software to validate or manage the identities of employees, customers, other end users, and even devices like internet of things (IoT) devices. End users, including customers, employees, patients, students, and others, benefit from decentralized identity solutions in terms of convenience and privacy.
Unlike centralized identity management software where a company retains PII about the user such as name, email address, passwords, and other identifiers, decentralized identity management allows the end user to maintain direct control over their identity information and easily share or revoke access to that data by the organization validating the identity. The concept of an individual having direct control over their digital identity without the use of a centralized registry, identity provider, or certificate authority is called self-sovereign identity (SSI).
Decentralized identity solutions are often built on distributed ledger technology (DLT) systems, such as blockchain software, which provides validation, improved traceability, and documentation over traditional identity management solutions. End users store their digital identity and other credentials in a verifiable credential wallet.
To qualify for inclusion in the Decentralized Identity category, a product must:
- Support the creation, management, and storage of digital identities and other verifiable credentials
- Facilitate identity verification by validating credentials and performing risk evaluation
- Be built using standard DLT technologies including W3C-compliant decentralized identifiers and verifiable credentials
