Self-Sovereign Identity Explained

Heard the phrase "self-sovereign identity"? Here is what it means and how it could change your experience of the internet.

AccessTimeIconOct 1, 2020 at 7:56 p.m. UTC
Updated Dec 12, 2022 at 12:46 p.m. UTC

Brace yourself for a concept that will feel jarring, an idea that will clash with everything you know about 2020 and a philosophy that will feel downright unthinkable: Optimism.

Many internet 2030 scenarios are bleak. (See other entries in our "Internet 2030" series). 

Here we imagine a brighter online future: What if we “owned our identity,” meaning you have some kind of digital passport (or wallet) that proves you are you, not some imposter, and that this passport is secure, easy to use, and widely accepted in all corners of the internet, and also at banks and gyms and schools and shops? And what if – crucially – your passport is not controlled by third parties like Facebook or the government? 

And what if we “owned our data,” meaning that instead of trusting the Googles and Facebooks with our precious data – a resource more valuable than oil – we are the custodians of our data, and we only share it when we choose, in certain contexts, and perhaps we can sell it or license it? 

This article is part of CoinDesk's "Internet 2030" series.

In today’s internet, most of us have made the Faustian bargain of trading agency for convenience. We trust Facebook with our log-in credentials to countless other sites, the photos of our family, the contents of our private messages, and troves of personal details that can be repackaged, exploited, and weaponized – in just one tiny example, arguably tipping the 2016 election to Donald Trump.

But most of us make that Faustian bargain. We hold our nose and click. We feel that unless we want to be an online hermit, there really is no choice. 

Self-sovereign identity (or SSI) would be that alternative. It would combine the convenience of Facebook with the principles of decentralization. When the SSI puzzle is fully cracked, centralized brokers like Facebook would be replaced (at least partially) with peer-to-peer communication, as we no longer need intermediaries. 

See also: Jill Carlson - Me, Myself and My Multiple Avatars

“You’re re-democratizing the internet,” says Drummond Reed, chief trust officer of Evernym, one of the organizations trying to make SSI a reality. “You’re pushing the power, literally, out to the peers.” Reed is no Pollyanna, and he doesn’t expect the Facebooks to vanish in the next decade, but he predicts that “we will see a pretty dramatic reshaping of the power distribution.”

Okay, but what would that actually mean from a user experience? SSI can be an abstract concept, making even Bitcoin look simple and easy to explain. It’s tough to visualize or appreciate.  So for this scenario, we’ll envision some ways that SSI – and ownership of your data – would change your (online) life. 

Welcome to a better internet.

No more username and password hell

Currently you have 37 usernames and passwords to keep track of, from the biggies (Google, Facebook) to that stupid frequent flyer website you only use twice a year, and each time you forget your log-in.  

With SSI? Poof. You now have one master key that can open countless locks. “You’d use your ID to log in to anything that you need to access – in a utopian world – from banking to websites. It doesn’t matter. It’s one ID,” says Alanna Gombert, CEO of the Digital Asset Trade Association, and co-head of the ConsenSys Identity team working on uPort, another digital identity project. “We don’t want to make the users do more work,” says Gombert. “That’s not going to be great for adoption. It has to be understandable, and it can’t be gobblygook.” 

A trusted internet

Deep fakes. Misinformation campaigns. Fake news. The internet’s “trust problem” is well-documented, and without dramatic changes, the problem is likely to get bleaker. 

“With the current state of artificial intelligence, we are getting to a point where any person could be able to deep fake any other person,” says Paula Berman, a digital identity expert and member of RadicalXChange, the organization that pushes for greater data dignity (amongst other concepts, profiled here) and penned The Data Freedom Act. “It’s the final frontier of truth being eliminated,” says Berman. “This is the point where we’re really getting to a post-truth society.” 

If you lower the friction and you increase the trust — not just the trust in the financial exchange, but in the individuals involved – you’re going to enable more efficient, and more decentralized forms of business.

SSI could be the solution. Imagine a future internet where every tweet, post, pic, video, or article is cryptographically signed to verify the author’s identity, like a vastly superior version of Twitter’s little blue check mark. And if you see content that lacks cryptographic authentication, then you’d suspect it’s bogus. In this version of the internet, “you should not trust anything not signed by identity,” says Rouven Heck, executive director of the Decentralized Identity Foundation, and also the head of R&D at ConsenSys Identity. (Aside: It seems that everyone in the digital identity space has at least three professional identities.) “Whether it’s an article or a photo,” says Heck, if there’s no identification, then “you should consider it a deep fake, or that it’s not real.” 

More fluid payments

At first blush, the idea of “peer-to-peer payments” looks like the bailiwick of Bitcoin and cryptocurrencies, not SSI. Yet the two could be linked. “The emergence of SSI and trust-over IP will significantly change how value exchange will happen,” suggests Reed. The logic: Digital wallets are being developed for SSI, and those will be cryptocurrency-enabled. Widespread adoption could (at last) follow. 

In the same ways that credit cards revolutionized commerce, says Reed, these peer-to-peer payments will enable “value exchange for more services.” Suddenly it’s easier to support local artists. It’s easier to find and pay a trusted babysitter, a plumber, a driver to pick up your kids from soccer practice. 

How is this different from the benefits of Bitcoin? Reed explains that with SSI-enabled payments, it’s not just about trusting the payment process (ensuring that X gets paid Y dollars), but it’s also about trusting the plumber or the babysitter. You’re not just confident that X will get the money; you’re confident that X is the responsible babysitter who has accumulated a solid reputation from your neighbors. “If you lower the friction and you increase the trust — not just the trust in the financial exchange, but in the individuals involved – you’re going to enable more efficient, and more decentralized forms of business.” 

The shorthand is imperfect, but think of this as Yelp meets Bitcoin. 

One identity across ecosystems

Consider the world of gaming. Today, you might have one identity in Fortnite, another in Second Life, another in Call of Duty. If you’ve played thousands of hours in World of Warcraft, building up an online reputation? This means nothing when you create a new ID in League of Legends. You start from scratch.


Flash forward to 2030. In the online utopia of SSI, you could float between worlds with the same core identity, bringing your reputation with you. (You will not necessarily get more dates.) 

This might sound trivial, but consider the case of online trolls or bullies. In today’s world, it’s possible for ass-clowns to create an avatar in one game, spew racist hate speech, get banned, and then simply create a new character in a different game and continue their trolling. With a unified SSI that transcends platforms? Online “reputation” would follow you, potentially curbing toxic behavior. 

Hyper-personalized shopping

We all know that queasy feeling. When you spot an online ad that’s just a little too perfectly personalized – how did they know I was in the market for a bike helmet? We feel like we’ve been tracked, spied on, eavesdropped. Then again … when we’re truly shopping for a bike helmet, well, it can be useful to get an ad for bike helmets. Targeted ads, while creepy, have merit.  Once again we make that agonizing tradeoff between privacy and convenience. The SSI internet of 2030, potentially, could give us both … with dramatically greater personalization. 

“I can go to a website, and they can give me a customized experience without asking for a log-in,” says Heck. Since you control your data, you would then “trustlessley” (in blockchain-speak) share the relevant info to the site, which could instantaneously personalize your shopping. The site wouldn’t just give you options to buy sneakers in ten different sizes (like today’s Amazon); instead, it would automatically display the sneaker in your exact size. 

Key caveat: It would only do this if – and only if   you’ve given permission for the partner to know your shoe size, and you have confidence this data won’t be repackaged to other parties. “I decide what I share,” says Heck. “That’s the sovereign element of this. I have the choice.” 

Secure and private messaging

Think of all your messaging platforms: Telegram, iMessage, WhatsApp, Signal, plain old SMS, Facebook Messenger, Instagram DMs, Discord, Twitter DMs, and not to mention Tinder and Hinge and Bumble. You have different contacts across these channels. Some are encrypted, some are not. “I should be able to use one smart secure messaging platform for everybody,” says Reed. 

This won’t happen without a widespread agreement on “open standards,” says Kaliya Young, aka Kaliya-Identity Woman (her Twitter handle), who has been working on SSI for over 15 years. (“I was against Facebook before it even existed,” says Young, laughing a bit.)

Young gives an example: Let’s say she wants to use Facebook Messenger to communicate with her Mom. “Facebook is in the middle in two ways,” explains Young. The first: Our identifiers (like our user names, or Twitter handles) are in their centralized database. “So their [Facebook’s] identifiers are intermediating us, meaning if they decide to cancel my account, all of the sudden I lost my connection to my mom, because I didn’t own the identifier, they did.”

The second: Facebook wrote the protocol that handles the communication. “They’re 100% in control of the software,” says Young. So with SSI, if we own all of our identifiers and data, and if there are open-standard communication protocols, that would enable private communication that cannot be snuffed by a centralized power.  Easier said than done, of course. Where our data (like our identifiers) should be stored is still something of an open question, and the tricky task of creating open standards is the mission of groups like the W3C Decentralized Identifiers (DID, for short), which are trying to create clear, interoperable rules for peer-to-peer communication just like there are for SMTP and email.

Sell your data, get better data

Quick thought experiment: Imagine there’s a photo program, like Flickr, that has thousands of your photos. Now let’s pretend that – for whatever reason – an AI wants to figure out if each person in your photos is a “friend” or “work associate.”  Even the smartest, creepiest, most efficient AIs would struggle with this job. 

“If you ask an AI to go through the account and identify which people are your associates, and which people are your friends, that’s a really tough ask,” says Dele Atanda, founder of the Internet.Foundation and founder of metaMe. How would the AI analyze your photos, to identify the friends and associates? Maybe it would cross-reference the photos with LinkedIn. Perhaps it would try and match each face with your Instagram account. However the AI tries to do it – and putting aside the creepiness factor – the results will be sloppy. 

Now Atanda suggests a simpler solution: What if someone paid you 10 cents per photo to simply say, for each picture, Is this an associate or a friend? “We’re going to get much more accurate data,” says Atanda. And if we own our data, why shouldn’t we be able to sell it? (This has been the argument of RadicalXChange’s Glen Weyl and tech icon Jaron Lanier, who have both written extensively on the topic, such as this co-authored paper on how we can unlock economic value by thinking of ourselves as “data laborers” who should be compensated.) 

Back to those photos and the AI. The quality of data will improve in a world where we own our data and we sell our data, says Alex McDougall, co-founder of Bicameral Ventures, and an investor in MetaMe. McDougall is a realist who’s not counting on idealism to win the day; he’s pointing to the profits. “The main piece that gives me hope – and says we’re on the right side of economic history – is the value of the data profiles,” says McDougall.  

McDougall compares the current state of data to “crude oil,” and refined SSI-injected data as “refined oil,” which will have greater value. (He shares more of this in a CoinDesk op-ed.) Like the other digital identity experts, McDougall stresses that none of this will really work unless the tools and interfaces are simple enough for Grandma to use. “If Grandma can’t use it, we’re not going to solve these big picture macro problems,” says McDougall, adding that until the right tools are in place, “we’re all just circle-jerking here.”

Decentralized social networks

Goodbye, Facebook. Hello, decentralized social networks. Reed imagines new apps that offer more “localized discussions and information sharing.” These apps might even look and feel a bit like Facebook – (the internet of 2020, after all, doesn’t look that much different from the internet of 2010) – but Reed says they’ll be “spread out everywhere, versus a centralized service.” 

“It will look more like our real social networks look today,” explains Reed. “We talk to our friends. We get together in parties, in groups, in churches.” (And maybe, by 2030, we’ll live in a non-quarantined world that once again has parties.)  

Online organizations with hard power

With a few exceptions, in reality, the internet is mostly a place to buy things, to watch things, to read things, to tweet things. Or, to be less charitable, it’s a place to waste time. 

But once we fully crack the issue of identity, says Berman, “People will be organizing and creating communities that have actual, very material impact in the world.” It’s true that today’s internet is packed with organizations like Meetup, Reddit communities, and of course Facebook groups. Berman is thinking bigger. Not just online meet-up groups, but virtual organizations that could, eventually, rival the power of nations.

SSI could enable online voting – since your identity is now verified, online voting suddenly works – and this, in turn, would enable virtual organizations to wield hard power.  “The internet will not just be a place where you ideate and talk about things, but it will be a place where you build and you shape reality.” 

Maybe it’s a global organization for climate change. Maybe it’s a new political party that will rival both Democrats and Republicans. Or maybe it’s just a neighborhood group that makes decisions on how to handle the weekly garbage collection. But it all comes back to SSI. “This is something that is only possible if you are able to have self-sovereignty,” says Berman. 

And finally, perhaps the most speculative and sci-fi scenario…

'Flow' like a multimillionaire

“Imagine you’re a multimillionaire, and you’re taking a flight from New York to Los Angeles,” says Atanda, suggesting another thought experiment. Here’s the scenario: A car picks you up from your apartment, drives you to a private plane, and your favorite cocktail is waiting for you. Your favorite magazines are tucked in your seat. When you land in LA, a private car (your preferred car, of course) whisks you to your hotel, and your assistant has already set up drinks with your LA friends. “You have this flow,” Atanda explains, “your life just flows. And ultimately, that’s what the Internet can deliver us. That’s the real promise.”

So what does SSI have to do with the flow of a multimillionaire? In theory, if we own our data and we have the ability to selectively (in certain contexts, and under our control) allow services and partners access to our data, then both the quantity and quality of that data improves, and the quality of goods and services improves. (Like with the photo example – getting paid to identify friends or associates.)   

Now here’s where it gets a little out there: Thanks to this ocean of high-quality data that would now be available, what Atanda describes as your “self-sovereign AI” can act, in effect, as an executive assistant to a multimillionaire, providing your life the same kind of flow.

“My self-sovereign AI is my digital twin,” says Atanda. “He does my work in cyberspace.” The self-sovereign AI has sponged up all your data, so much data that it makes your Facebook profile look elementary.  Your self-sovereign AI can book your flight to LA, arrange your car pick-up, set the perfect temperature in the car (it might even know your biometric data, thanks to a wearable), and because it knows the last seven restaurants you went to in New York— it knows everything — it can suggest a restaurant you’ll enjoy in LA. 

The only reason this would be (theoretically) possible is that you have chosen to share gobs of personal data, and crucially, you choose to selectively share that data — which can only be used for limited purposes — to specific partners at specific times. “Uber’s AI doesn’t need access to all of my data,” says Atanda, “it just needs access to the data that’s relevant.”  

Thanks to this data you have voluntarily shared or sold, the AI knows who your friends are in LA. The AI knows that you’ve been texting with Sarah (who lives in LA), so it asks you, “Would you like to have drinks with Sarah?” Then your AI talks to Sarah’s AI, and the two AIs jointly coordinate your plans in a bizarro example of “I’ll have my people talk to your people.” 

Will this be ready in 2030? Atanda acknowledges that the full manifestation of the AI probably won’t be a reality, but adds that the declared mission of his Internet.Foundation is “to get a billion people self-sovereign by 2030.”

It’s a start. And it’s a rare case for optimism.



Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.