A decentralized identity system is one where verified credentials are not stored and controlled by a single, central authority – i.e. it is the exact opposite of a centralized identity system.

The “decentralized” nature of the system may be seen at different levels. For example, the actual issuing of ID credentials may be decentralized (such as the wide range of cell phone retailers registering SIM cards) or in the storage of the data (using a network of different databases).

In contrast to centralized systems, a decentralized identity system allows for identity assertions or artefacts to be made independently of established identity providers, such as a bank.

In a digital context, this can allow users to access a range of different services using one “wallet” of credentials which is in their hands – rather than needing to be identified and verified by each service separately, or relying on the defacto ID of a big institution to unlock other services.

Some prominent examples of decentralized identity systems utilize distributed ledger technologies – such as blockchain – though not all decentralized systems do so.

A private sector example of a decentralized identity system is uPort – a system which allows users to register their own identity on the blockchain platform, Ethereum, and control which data is shared and accessed by different services.

Governments are also increasingly drawing on decentralized identity systems. A notable example is Estonia which used home grown KSI Blockchain technology to power its national ID card system and e-government services.

The concept is closely aligned with self-sovereignty, in that these systems users greater control of their personal data and how it is shared.