Decentralized Identity in 2025 and the Next Phase of Privacy

For years, Ethereum co-founder Vitalik Buterin has advocated for in the crypto space. Buterin argues that onboarding users alone is not enough, cautioning that widespread use of “walled gardens” would undermine the core purpose of decentralized systems.

“The goal is not to onboard people to Ethereum. The goal is to onboard people to openness and self-sovereignty,” he recently wrote on a post.

Buterin is one of crypto’s most prominent advocates for privacy as an industry’s core value, emphasizing individual protection from state and corporate surveillance and arguing that decentralization helps disperse power away from a few dominant actors.

This year, decentralized identity emerged as one of the industry’s most active responses to digital surveillances. Rather than converging on a single global identifier, new efforts increasingly emphasize selective disclosure enabled by new technologies, allowing users to prove specific attributes, such as uniqueness, eligibility or compliance, without revealing their full identity.

The shift reflects a broader challenge facing blockchains, applications and regulators alike: how to verify users without turning networks into surveillance systems.

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Ethereum becomes the main testing ground

Unsurprisingly, Ethereum has emerged as one of the main testing grounds for decentralized identity and privacy-preserving infrastructure. 

In an Oct. 29 , Ethereum’s X account said more than 750 privacy-focused projects were building on the network, many addressing identity, credentials and selective disclosure rather than anonymous payments alone.

The thread was met with praise from the community, with the Book of Ethereum, a community-run account focused on Ethereum’s culture and ethos, responding with a post that described privacy, zero-knowledge tools and human-centric identity as an “unfolding reality” on Ethereum rather than a distant ideal.

Buterin has also weighed in directly on decentralized identity in writing this year.

In a June 28 , he warned that early attempts to replace centralized logins with a single, persistent onchain ID can still introduce serious risks, arguing that even privacy-preserving identity systems may enable long-term tracking, coercion or loss of anonymity when too much activity is tied to one identifier.

Instead, Buterin advocates for attribute-based verification, where users prove only what a specific application needs to know rather than presenting a single global identity. are the tool that makes this possible by allowing a person to prove a statement is true without revealing their underlying personal information.

In Buterin’s framework, this approach preserves privacy while avoiding the dangers of consolidating identity into a single, permanent digital ID. In December, Buterin suggested that and blockchain-based systems on to demonstrate that its content-ranking algorithms operate fairly.

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From enterprises to proof-of-personhood systems

Beyond Ethereum, enterprise-focused identity platforms advanced in 2025. In August, the , a self-sovereign identity platform built on the Hedera network, positioning it as a decentralized option for governments and institutions exploring digital credentials.

Proof-of-personhood systems, which aim to verify that an account corresponds to a real and unique human rather than a bot or duplicate, also continued to evolve in 2025, with Sam Altman’s remaining the most prominent example.

World’s identity protocol, World ID, is designed to let users prove they are real, unique humans online without revealing personal data. According to the project’s , after biometric verification through an iris scan, the data is encrypted, sent to the user’s device, and deleted from the verification hardware, so only the user controls their World ID, with no personal information shared with third parties.

While its biometric-based approach targets human uniqueness at scale, critics have raised and coercion.

The resurgence of decentralized identity in 2025 has also drawn attention from leading figures in crypto. In June, Coinbase CEO Brian Armstrong framed decentralized identity as a key pillar of the internet’s next phase, that it is “taking off” alongside decentralized social media and prediction markets.

Digital identity meets state surveillance concerns

As governments move toward digital identity systems, questions around data control and privacy are becoming more consequential.

In Switzerland, a country often cited for its strong privacy tradition, have drawn renewed scrutiny. In January, the Swiss Federal Council  revising the OSCPT (Ordinance on the Surveillance of Postal and Telecommunication Correspondence) to expand monitoring obligations for telecom providers and extend those requirements to services such as social networks, messaging apps and VPNs.

As drafted, the changes would require service providers with at least 5,000 users to verify identities and decrypt any communications that are not protected by end-to-end encryption.

The proposal received strong pushback. Decentralized VPN provider Nym urged Swiss citizens to contact their elected officials and fight back against the proposal. The company :

 At a time when the Swiss are celebrating the success of leading privacy-preserving companies such as Proton and Threema, when the army itself has chosen to use Threema, and when other promising players, such as Nym, are emerging in the field of privacy-friendly technologies and the protection of people’s digital integrity, this ordinance by the Federal Council is destroying an entire sector.

In July, the privacy-focused tech company Proton it had frozen investments in Switzerland amid the uncertainty surrounding the proposal, redirecting $100 million toward data centers in Germany and Norway.

On Dec. 10, Switzerland’s Council of States to rein in the proposed expansion of telecommunications surveillance, tacitly backing a motion that calls on the Federal Council to reconsider the reform. 

In the United Kingdom, the Concordium blockchain in August that lets users prove they are over 18 using zero-knowledge proofs, without revealing their identity. The release came as the UK rolled out mandatory online age-verification rules for adult content.

In the United States, Google an expansion of government-issued digital IDs in Google Wallet across multiple US states in April, enabling mobile ID use at DMVs and TSA checkpoints.

The update also introduced zero-knowledge proofs for age verification, highlighting that the technology is no longer limited to crypto-native projects, but is increasingly being adopted by Big Tech platforms as part of mainstream digital identity systems.

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