Decentralized Identity Solutions: Exploring Top Use Cases and Applications

In the rapidly changing world of digital interactions, decentralized identity has emerged as a major breakthrough, revolutionizing the way we safeguard and maintain our online presence. Unlike centralized identification systems, decentralization technology provides people with more control over the modification and management of their personal data.

In this article, we explore how this paradigm is set to create a more user-centered and safe digital future, through decentralized identity use cases.

Understanding Decentralized Identity Solutions

Decentralized identity management system primarily relies on self-sovereign identities (SSI), which is an approach to digital identity that gives the users complete authority and ownership over their online personas. There is no third-party or centralized identity provider or similar authority. This ecosystem is made up of three components: decentralized identifiers (DIDs), blockchain networks, and verifiable credentials.

DIDs are user-created, user-owned, and cryptographically verifiable identifiers that are not affiliated with any one organization. These are like usernames and have the potential to become universal identifiers for accessing a range of services.

Blockchain networks carry the decentralized distributed databases on which the identifiers are created and secured, owing to their tamper-proof nature.

Verifiable Credentials are digitally encrypted versions of the paper and online credentials of people, that can be validated by organizations or platforms without actually seeing the actual data.

Benefits of Decentralized Identification Systems

Decentralized identity solutions enforce greater power in the hands of individuals as well as organizations. This can be observed in the following aspects:

Complete Privacy and Ownership

With a decentralized identification system, people and organizations can have complete control over their credentials and related information, without the involvement of any intermediary. Also, the owner alone can choose whom to grant access to their data. This is facilitated by cryptographic techniques and associated mechanisms.

Greater Security

For quite a long time, centralized identity solutions have faced the troubles of server crashes, data breaches, unauthorized access, and thefts. These vulnerabilities usually arise because of single points of failure. As per a study in the US, 84% of firms have had at least one identity-related breach in 2022, resulting in $43 billion in losses from identity theft.

On the other hand, decentralized digital identities are made much more secure due to the immutability and distributed characteristics of blockchain-based data. In other words, no one can modify a person’s digital identity or steal data.

Easier and Efficient Accessibility

Without the need to go through tedious authentication processes, these digital identities can be used for multiple decentralized applications, leading to a more user-friendly and streamlined experience. Simply put, decentralized identification, being independent of any one source provider, is portable and designed to become inherently universal. This will help in reducing the overall costs, by eliminating the need for intermediary platforms.

Social and Financial Inclusivity

As per the World Bank report, 850 million of the global populace do not have any sort of legal identity. This owes to the causes like bureaucratic hurdles, resource limitations, cultural/ ethnic factors, political conflicts, etc.

In this scenario, decentralized identity frameworks can become the tools for empowering the underprivileged sections of society.

Top Use Cases of Decentralized Identities

Today, several organizations, including tech giants like Microsoft, offer decentralized authentication services and related identities. And entities such as the W3C Working Group provide and set standard technical specifications for DID models.

It is anticipated that by 2027, the global market for decentralized identity will generate an astounding $6,822 million in revenue.

The top use cases of decentralized identification are demonstrated across various industries as follows:

Corporate and Business

The use cases of DIDs can enormously enhance the way corporations tackle data and communicate with their customers, clients, and employees. From onboarding and data sharing to boosting marketing efforts and improving productivity, the utilization of decentralization technology for user IDs and customer personas can be made much more efficient and error-free.

Companies like IBM, Accenture, Nike, Amazon, etc, are already using decentralized identifiers for their marketing campaigns, data storage and management, etc.

Banking and Finance

Decentralized authentication systems have proved to be of utmost value to the financial sector. With self-sovereign identities, users can securely carry out cross-border transactions, conduct P2P payments, and make use of personalized financial services. In the long term, this will result in greater financial inclusion, paving the path for DeFi (Decentralized Finance).

For instance, a Spanish consortium, Alastria, helps financial institutions in integrating DID solutions.

Supply Chain

With the immutability of DIDs, the supply chain sector greatly benefits in terms of tracking goods in real-time, establishing product authenticity, securing information exchange, and thus, preventing frauds. Bigwigs like Walmart, BMW, and Nestle, are engaging with blockchain platforms to implement a decentralized identification system.

Moreover, it can go a long way in bringing SMEs (small and medium enterprises) into the competition.

Education and Training

Decentralized solutions can be of valuable assistance in storing and managing learning credentials and linked records. Through DIDs, both individuals and institutions can keep track of achievements, certifications, etc. Besides, students and trainees can get better access to opportunities, tailored to their skills and qualifications.

Some of the institutions using DID for learners include Griffith University, Arizona State University, IBM SkillsBuild, etc.


The medical sector often faces delays in implementing healthcare programs, securing licenses, maintaining patient records, etc. But with decentralized digital identities, the medical and pharmaceutical tracking data can be made more patient-centric, easily verifiable, and faster in execution. US companies like MedCred use DID technology for securing and coordinating patient data in a user-centric and seamless manner.


By now, we can see that many of the issues caused by centralized and federated identity management systems, such as costly and time-consuming verification procedures, fake certifications, and data breach threats, are being addressed by decentralized identity solutions. While this technology is still in its infancy in terms of adoption, some of the key pilot programs and applications affirm their promising potential in a range of sectors.

Ultimately, the decentralized system will foster confidence among the organizations, their stakeholders, and customers at large.