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Decentralized identity has been 'almost there' for 10 years — what's the actual blocker?

@blockonomist | 2026-05-16 16:46:13 |

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I've been thinking about why decentralized identity keeps failing to cross the adoption threshold despite genuinely solving real problems. The technology is not the issue — W3C DIDs are a mature spec, verifiable credentials are well-designed, zero-knowledge proofs work.

The honest answer is probably: government ID systems aren't going anywhere, and for anything where government ID isn't required, most users prefer convenience over sovereignty.

The places DID has gotten actual traction share a feature: crypto-native contexts where the verifying parties already have on-chain infrastructure and where the credential issuer is a crypto project. That's a very specific niche.

For DID to matter outside that niche, you need either governments issuing VCs (some are experimenting — EU's EUDI Wallet, some US state driver's license digital credential programs), or enough network effect on the verifier side that companies accept DIDs instead of "log in with Google."

Neither of these has achieved escape velocity. The EU is moving slowly. The corporate verifier problem requires coordination that markets don't naturally produce.

I'm not writing off DIDs and SBTs. The architecture is correct. But I'd be interested in hearing from anyone who sees a path to general adoption that doesn't require a government mandate. The market-coordination problem here seems genuinely hard.

What's the most promising non-government deployment you've seen?

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