Digital Identity (DID): Reducing Onboarding Friction

KYC is a double-edged sword: regulators demand it, but storing the resulting data makes you a target for hackers. Traditional identity is siloed, forcing users to re-verify for every service, leading to 'Verification Fatigue' and churn. In 2026, DID flips the model: users carry their identity with them as 'Verifiable Credentials' (VCs), allowing businesses to 'Consume Proofs' rather than 'Collect Data.'

80% of breaches are caused by weak credentials. Storing passwords is a fiduciary risk; if breached, you lose your customers' full profiles. DID uses Public Key Cryptography (FaceID/Passkeys) to 'Air-Gap' user security from your servers. A hacker may breach your database, but they'll find no credentials to steal.

Implementation revolves around three roles:

Onboarding is your 'leaking bucket.' DID slashes churn by enabling 'One-Click' onboarding for users who already have verified credentials in their wallets. It also eliminates per-user KYC fees ($1-$5/user), replacing them with fractional gas costs or free off-chain signature verification.

B2B trust is revolutionized through automated compliance. A manufacturer can query suppliers' wallets for 'ESG Compliance' credentials every 24 hours. If an auditor revokes a credential, the relationship is automatically paused. This enables real-time monitoring with zero manual labor.

Identity is now composable. A user's reputation as a high-rated seller or accredited investor can be 'imported' across platforms, allowing businesses to target high-value users who have already proven their trust elsewhere in the ecosystem.

Build on open standards: W3C DID specifications and Verifiable Credentials (VCs). Use ZK-Proofs (See Article 23) to verify results without sharing data. Integrate with established providers like Polygon ID or Microsoft Entra rather than building proprietary walled gardens.

User data has shifted from 'The New Oil' to 'The New Nuclear Waste.' DID allows you to stop being a data warehouse and return to being a service provider, adopting a new fiduciary standard for security and customer-centricity.