Web3 identity is a system that allows users to manage their online identities in a more secure and efficient way without relying on a central authority. The basic concept of a Web3 digital identity is that it refers to a digital identity that is owned and managed by a single individual instead of a centralized entity.

What is a Web3 Digital Identity?

Ultimately, Web3 champions the idea of Self-Sovereign Identity, meaning that rather than giving centralized parties the ability to control and process our personal information, users would be in full control of our own data and digital assets instead. Under this new decentralized version of the Internet, Web3 would ensure benefits such as:

• Greater Privacy: Users will be able to decide what personal information they share and with whom, ensuring they only need to provide the most necessary information when logging into websites/applications or engaging with specific transactions.
•  Greater Security: By leveraging decentralized networks and storing their data on their own devices, users will not only have more control over their information, but also have greater protection against breaches from hackers, identity theft, and fraud. 
• Interoperability: Web3 identities are interoperable, meaning that users will be able to access various applications and services using the same set of credentials without needing to create separate accounts or sacrificing personal data. 

Unlike Web2, in which digital identities are managed on centralized platforms like servers or the cloud, Web3 identities are built on decentralized technologies like blockchains. A blockchain is a decentralized database that securely and transparently records all transactions made between multiple parties and users. The idea is that by utilizing blockchain technology, users would actually have more control and say over how they store and manage their personal data.   

Examples of Web3 Digital Identities

Two notable use cases of Web3 digital identities are Ethereum Name Service (ENS) and Bitcoin Name Service (BNS). ENS and BNS are protocols that cement an online user’s identity on a blockchain via unique identifiers. This means that once a person has selected an available name and claimed it, only they have access to that name. 

Ultimately, ENS is specifically designed for the Ethereum blockchain. BNS, however, is built on the Bitcoin blockchain and offer users the following:

• A decentralized Web3 domain name system that is made specifically for the Bitcoin blockchain and is registered by Stacks. 
• Users can generate and manage human-readable domain names that end with the extension that end with Bitcoin-based extensions like “.btc.”
• Domain names can be used to send and receive payments, provide seamless login capabilities, manage multiple Web3 accounts, and cannot be blocked or deleted.

ENS and BNS are not the only two examples of different ways Web3 digital identities are used. Nowadays, there are a variety of other projects and applications that attempt to decentralize the Internet via Web3 digital identities as well.