Why Is Digital Identity Important In Web 3.0?

Why Is Digital Identity Important In Web 3.0?

We Are In The Period Of Transition To A Decentralized World And Digital Revolution, And These Rapid Changes Necessitate Learning The Details Of The New Generation Of The Internet, I.E.Web, 3.0 Doubles Businesses, And Ordinary Users Will Gradually Realize The Advantages Of Web 3.0 Technology And The Growing Number Of Its Services.

Therefore, due to the expansion of the applications of this new technology and the need for authentication in this system, Web 3.0 has become one of the main priorities in the discussion around the new generation of the Internet.

You must have encountered numerous problems with the current Internet (Web 2.0). Some of these significant problems are social media addiction and catastrophic data privacy breaches affecting users’ digital experiences.

The evolution of the Internet with the help of blockchain has introduced the concept of Web 3.0 to the world of technology. This significant development will change the current Internet’s primary mechanism and way of working and will solve many problems of the current Internet.

Now, you may wonder what role digital identity will play in the evolution of the current Internet to Web 3.0. Digital identity is one of the main elements of Web 3.0 and plays a vital role in managing user interactions. Digital identity is the foundation of almost all transactions and interactions in Web 3.0, including financial transactions and interactions with the metaverse.

This article will examine the basics of digital identity in Web 3.0 and how it works. If you want to learn more about digital identity in Web 3.0, stay with us until the end of the article.

A brief overview of Web 3.0

The answer to the main topic of this article, “Why is digital identity important in Web 3.0?” will not be understood without referring to the basic explanation of Web 3.0. The origin of the term Web 3.0 began with innovative developments in blockchain technology.

Gavin Wood, the co-founder of Ethereum and the founder of Polkadot (Polkadot), proposed this term in 2014.

Why is digital identity important in Web 3.0?

Gwyn Wood’s definition of Web 3.0 is a decentralized online ecosystem based on blockchain technology. After some time has passed since this concept was introduced, the web 3.0 space became very popular with the continuous growth of the entry of venture capital, and now we can say that we are at the peak of this popularity. Experts have also welcomed Web 3.0 as one of the best solutions to facilitate the regulation of the web world.

In the meantime, you might ask yourself, what is the need for Web 3.0 with the current Internet? Looking at the recent Internet problems, we will better understand the reason for the importance and need for Web 3.0. In the current state of the Internet, tech giants control where data is stored. Still, on the contrary, Web 3.0 has eliminated the threats associated with data centralization by removing centralization from data storage.

Why is digital identity important in Web 3.0?

As always, blockchain technology acts as one of the integral parts of decentralization; in Web 3.0, the task of decentralization is also the responsibility of blockchain. Some of the essential parts of Web 3.0 are:

  • Non-homogeneous tokens or NFTs: these tokens allow for the tokenization of assets and their use for faster verification of ownership of assets in Web 3.0.
  • Decentralized self-governing organizations or DAOs: this sector also helps to create a fundamental change in traditional organizations by providing the possibility of decentralized management of communities. As a result, DAOs can allow Web 3.0 members to participate in essential network decisions.
  • Defi: In simple language, it can be said that Defay democratizes finance. Widespread decentralized lending and borrowing protocols are an excellent example of how DeFi has grown as a vital element of Web 3.0.

Defining digital identity in Web 3.0

Web 3.0 gives power to ordinary network users, which is the main advantage of the new Internet generation. Web 3.0 removes the monopoly and control of large companies and distributes power to normal users.

As we mentioned, Web 2.0 relies on a centralized data repository for authentication. For example, if you have to open a bank account on Web 2.0, you need to verify your identity. Banks also usually delegate the task of identity verification to a third-party service provider.

This means that in addition to the bank, a third party can also have full access to users’ sensitive information. Therefore, it can be said that in Web 2.0, there are no specific restrictions on who can access your data and where your data is stored.

On the other hand, in Web 3.0, digital identity verification using blockchain technology helps to avoid the problems of centralized authentication systems. Web 3.0 solves the problem of storing private information in the centralized authentication process. In addition, the review of identity theft cases has proven that centralized authentication mechanisms are not immune from data theft either.

Will authentication in Web 3.0 solve these problems? Yes, but how? The most crucial point is that digital authentication in Web 3.0 is done in a decentralized manner, and during this process:

  • Users have complete control over their data without relying on centralized agencies such as private institutions, corporations, and governments.
  • Users can create digital identities based on their real identities, But their anonymity in the system is guaranteed.
  • One of the critical points of digital identity in Web 3.0 is to observe the principles of security, freedom, and privacy.
  • Web 3.0 digital identity system provides all necessary prerequisites for revolutionizing traditional Internet interaction approaches.

What are the fundamental problems of digital identity?

Why is digital identity important in Web 3.0?

To provide a basic definition of digital identity, we should say that digital identity refers to a specific set of digital information about a person or organization or even an electronic device.

A digital identity is an effective tool for licensing access to digital services and products and typically includes the following:

  • user name
  • Activity history
  • IDs required for digital signature
  • History of social media

Most digital identity management systems either take a centralized or federated (centralized) approach to identity management. A centralized identity management system involves a specific organization that takes control of the storage and management of all digital identities in a centralized location. The information required for centralized digital authentication usually includes a username and password.

The necessity of digital authentication in Web 3.0 is determined by evaluating common issues in centralized digital identity management systems.

Some of the critical issues regarding centralized digital identity are:

  • Users must manage different login credentials for each website and application separately.
  • Centralized storage systems of users’ identity information can create an attack point for hackers and, as a result, lead to data leakage. Many examples of information leaks in the recent past have shown devastating effects on users’ data.

The need for blockchain-based solutions to solve the problems of centralized identity management systems, including the storage and use, and sharing of personal data, is evident. Also, the lack of privacy in centralized identity management systems is apparent due to the possibility of centralized institutions accessing user data. So in the current system, centralized institutions can easily track people’s online activities.

A federal or central identity system can solve the need to repeat identity verification in different applications. A central authentication system is a system that allows users to access multiple programs by issuing a single credential. For example, you can use your Facebook or Google account to sign in to another website or app.

Meanwhile, the critical question is, when central identity systems are established, what is the need for digital authentication in Web 3.0? The answer to this question leads us to the following problems that are evident in federated identity systems:

  • The connection between multiple data sources with centralized identity management systems creates more vulnerable points for data breaches.
  • Sharing user information with third parties can jeopardize users’ privacy and security.

Authentication in Web 3.0 and solving problems related to digital identity

So far, with a detailed review of the issues related to digital identity in centralized systems, we have realized the importance of digital identity in Web 3.0. Next, we will see how digital authentication in Web 3.0 can solve the problems of centralized identity management systems with its capabilities:

  • In Web 3.0, the average user or organization can have complete ownership and control over their data.
  • The possibility of decentralized data storage in Web 3.0 authentication ensures better security than centralized identity management systems.
  • Users can log in with credentials to securely log into various apps and websites. Therefore, the user experience with digital identity management in Web 3.0 is simple; Because you don’t need to manage multiple user accounts and passwords.
  • Another significant benefit of digital authentication in blockchain refers to privacy protection. Users can verify their identity without revealing sensitive information such as name, address, or bank account number.

How digital identity works in Web 3.0

The benefits presented in Web 3.0 digital identity represent ideal approaches to change the way identity is managed. In Web 2.0, we need centralized digital identifiers such as email, password, username, and other sensitive information to access applications and websites. However, these identifiers create many vulnerabilities in the system.

What solution does digital identity offer in Web 3.0 to solve these problems? Three distinct elements, namely decentralized identifiers, blockchain technology, and verifiable credentials, are the Web 3.0 solution to these problems, which we will discuss further.

Decentralized identifiers

Decentralized identifiers serve as the foundations of digital identity in Web 3.0; Because you can prove your identity without revealing personal information. Decentralized identifiers, or DIDs, are the only sources of proof of your online identity without relying on a centralized authority. You can store unique, verifiable, and permanent identifiers in blockchain networks.

Web 3.0 applications can also use decentralized identifiers to verify your identity while providing better control over your personal information. You can also determine who can access your personal information.

Credentials can be verified.

Another critical aspect of digital identity functionality on the blockchain is verifiable credentials or VCs. A verifiable credential is an encrypted digital and physical credential verifying a user’s identity. Some popular IDs you can use as verifiable credentials include driver’s licenses, employment certificates, and digital passports.

Blockchain technology

Most discussions about digital identity in Web 3.0 draw attention to the role of blockchain technology. Blockchain provides a digital record of transactions without being recorded by any centralized authority; As a result, users will have more control over using their data. In addition, blockchain solves the problem of having a point of failure in centralized identity management systems.

Web 3.0 identity applications show how important this type of authentication is to the growth of Web 3.0. The authentication process in Web 3.0 can help to create immutable identities and open new doors to access metaverse platforms. Organizations can use Web 3.0 IDs to improve data security and ensure a better user experience while ensuring privacy. In return, users can enjoy the benefits of flexible access, enhanced safety, and better data control.


Digital identity will be necessary for users to access the Web 3.0 ecosystem. Improving digital identity management systems using Web 3.0 will benefit users and organizations. As the world prepares to adopt Web 3.0, digital identity in Web 3.0 can also play an essential role in building trust in Web 3.0 applications.