Deep Dive: Decentralized Digital Identity

Jessie Mongeon
3 min readMar 9, 2023

This guide was originally published on Check out the Filebase documentation site for the latest Web3 tutorials using IPFS through Filebase.

Learn about what a decentralized digital identity is and how it's used in Web3.

What is a Decentralized Digital Identity?

Decentralized digital identity refers to a form of digital identity defined by a representation of any digital information generated based on an individual’s online presence. Traditional digital identities include data such as online purchase history, social media posts, or user search history. In Web3, digital identities are taken a step further to become decentralized digital identities, also referred to as the acronym DID. In Web3, decentralized identities include a user’s crypto wallet, their cryptocurrency holdings, and any digital assets that they might own like NFTs.

In the traditional Web2 version of the Internet, most websites allow users to login using their Facebook or Google login credentials, providing a way for them to maintain one account that’s tied to several different platforms and applications. Web3 adds another layer of simplicity to websites and applications by allowing users to use their crypto wallet as their login credentials.

A crypto wallet address is a long, unique string of characters that is a mix of letters and numbers. Crypto wallet addresses are commonly used for users to send each other digital assets or cryptocurrencies. Since these addresses are hard to memorize due to their long, unique format, it can be difficult for users to use them for logging in to websites unless they have tools like web browser extensions installed.

To make decentralized digital identities human-readable and easier to share, a domain name can be minted as an NFT on a blockchain network that can be used as an alias for a crypto wallet address. This allows for human-readable names, similar to traditional account user names, that you can send to others when transferring assets.

Additionally, these domain names can be routed in the same way that traditional domain names are through the Domain Name Service (DNS) protocol. Through this configuration, decentralized digital identities can be used to host decentralized websites in addition to providing a set of authentication credentials that can be used for identity validation and verification within the Web3 ecosystem.

Decentralized Digital Identity Providers

  • .bit: A form of decentralized digital identity that is not limited to a single blockchain network such as other identities like ENS. .bit allows for your digital identity to be transferred between multiple blockchain addresses, through management through a single private key. For security, .bit uses proprietary smart contracts to verify signatures with different cryptographic algorithms such as secp265k1 and ed25519. It is not a .com or .net domain system and should not be equated to domain systems.
  • Ethereum Name Service (ENS): A digital identity service that is supported on the Ethereum network. Each ENS name is a human-readable domain name that can be associated with an Ethereum wallet address to simplify sending and receiving cryptocurrencies and digital assets. ENS domains typically end in the suffix ‘.ETH’
  • Next.ID: The first decentralized identity-as-a-service offering, or DIaaS. It provides decentralized identity aggregation that allows for the integration of Web2 and Web3 identities, resulting in a comprehensive and verifiable identity database that can be used by any open-source project or developer for decentralized application innovation.
  • Unstoppable Domains: NFT domain names minted on the Polygon network that can be used as decentralized digital identities. Unstoppable Domains offer top-level domain names such as .crypto, .nft, .bitcoin, and .wallet, in addition to many others. It supports over 275 tokens or coins, and over 315 integrations with other applications, platforms, services, and products.

Want to learn more about Filebase? You can sign up for a free account today to get started with IPFS.