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Portable Digital Identity: How the UK Can Finally Solve Its Privacy Problem

Portable digital identity is becoming a hot topic, thanks to figures like Tony Blair calling for its widespread use. The UK’s relationship with digital identity has always been rocky. The mere mention of a national identity card tends to stir up visions of Big Brother, mass surveillance, and uncomfortable dinner table debates about privacy. This cultural resistance has left the UK lagging behind countries like Estonia and Sweden, where digital identity systems have revolutionised daily life. However, that resistance may finally be breaking down, thanks to a clever shift in how digital identity is designed.

Historically, the UK’s refusal to implement a national digital ID hasn’t been without consequences. Without a standard digital identity, we’ve all endured the frustration of dragging our passports or utility bills to the bank or job interviews. During the pandemic, when much of the world swiftly moved services online, many in the UK were stuck navigating outdated, disconnected systems. Even worse, the reliance on physical documents has been a gift to fraudsters, who happily exploit weak identity verification processes.

Meanwhile, countries with strong digital ID systems have been living in the future. Estonians can file taxes, access healthcare, and even vote from their smartphones. Sweden’s BankID lets citizens seamlessly authenticate themselves for everything from banking to government services. In the UK, we’ve been doing the digital equivalent of riding a horse and cart.

But decentralized identity changes the game. At its core, this technology does something important: it puts control back into the hands of the individual. Instead of a centralised government database tracking your every move, you carry your verified credentials in your secure digital wallet. You only share what’s necessary, and even then, the details you share are cryptographically protected. Want to prove you’re over 18? In the future, you won’t need to reveal your date of birth or your address—just the proof of eligibility. It’s privacy by design, and for a country like the UK, that’s the magic ingredient we’ve been waiting for.

What’s fascinating is how this could disrupt the business models of today’s identity verification giants. Right now, every time you verify your identity—whether to open a bank account or rent a flat—the relying party pays a fee to an identity provider. It’s a pay-per-check system that generates ongoing revenue for the provider but creates costs and delays for businesses. With decentralized identity, that model is poised for disruption. Once an issuer, like a bank or government body, verifies your identity and issues you a digital identity credential, you won’t need constant re-verification. The issuer guarantees the validity of that credential for a set period under agreed terms. If your circumstances change—say you move house or change your name—the credential can be revoked or updated accordingly. This makes ongoing verification checks largely redundant and slashes the costs for businesses.

In other words, the identity verification industry is facing a major shake-up. Instead of relying on repeated verification fees, providers will have to explore new revenue streams—maybe through offering additional fraud detection or compliance services. But for individuals and businesses, the benefits are clear: less bureaucracy, faster processes, and fewer middlemen taking a cut.

So, what does the future look like? If decentralized identity is adopted widely, we can finally ditch the endless document checks, cut down on fraud, and enjoy the convenience of carrying our credentials in our pockets, safe and secure. The UK may have resisted digital identity for years, but with this new approach, it looks like we’ve found a way to embrace the digital world without sacrificing privacy. And maybe, just maybe, the days of rummaging through drawers for that old utility bill are finally numbered…

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