Tokenized Identity

Tokenized identity refers to approaches that place parts of a person's or company's digital identity on or alongside a blockchain, so that they can be proven to others without relying on a single central database. Examples include decentralized identifiers, verifiable credentials issued by trusted parties and held in a user's wallet, and non-transferable "soulbound" tokens proposed in 2022 to record memberships, qualifications or reputation. A financial firm could, for instance, issue a token confirming that a wallet owner has passed know your customer checks, letting other services rely on it. Many designs use zero-knowledge proofs so a user can prove a fact, such as being over 18, without revealing other personal data. Tokenized identity also overlaps with proof of personhood. Concerns include privacy, since public ledgers are permanent, the loss of keys, and who decides which issuers can be trusted.