Decentralized Identity (DID) in Crypto Wallets: A Game-Changer for Security and Privacy

Understanding decentralized identity and how it improves user security and privacy

The ONTO Team
ONTO Wallet
Published in
5 min readMay 12


The Web3 concept promises to create a more decentralized digital future that allows users to take control of their own data. Our personas are being transformed into digital identities that hold information about us, such as our usernames, passwords, search histories, and previous transactions, in order to navigate this new space.

What is Decentralized Identity (DID)

As a result, decentralized identity (DID) systems have emerged across the Web3 world to help users determine how much information is shared and with whom that information is shared. DID is quickly gaining traction in the world of cryptocurrency as a way to enhance security and privacy in crypto wallets. At its core, DID is a new way of storing and managing identity information in a secure, decentralized database.

The purpose of this technological revolution is to reduce society’s dependency on a few corporations to control our digital personas and enable our digital selves to follow us wherever we go.

To understand what decentralized identity is, we first need to go back to digital identities. These have been around since the birth of the internet. In traditional identity management systems, a user’s identity information is stored in a centralized database controlled by a single authority. One example is your email address, which is comprised of a chosen username and a domain name and represents your online identity.

Fast forward to the social media era, when big tech companies like Facebook and Twitter became the primary providers of digital identities. The vast amount of data users generate on these social media platforms is stored on the servers of these big companies, which then utilize user data to make huge profits. This business model served Big Tech well for many years, and users were willing to give up their privacy for the convenience of connecting with friends and family. However, a number of big data breaches and scandals have caused users to question the security and privacy of their data.

How DID Technology Improve Security and Privacy

While user data is stored and controlled by centralized authorities in a traditional manner, decentralized identity is built on a blockchain system, and the identity information is stored in a decentralized, encrypted way. This ensures that there is no central authority that can manipulate or control users’ identity data. Additionally, DID technology is designed to be more secure and private by enabling strong authentication and user control over their personal data, allowing users to decide whether to share their own data with third parties.

So how does the DID technology do this? To answer this question, we need to talk about decentralized identifiers. DIDs are possible thanks to two technologies: public-key infrastructure (PKI), which is used in blockchain networks to authenticate user identities and prove ownership of digital assets, and blockchains, which serve as open, trustless, and decentralized data stores. DIDs are stored on distributed ledgers (blockchains) or peer-to-peer networks. Thanks to blockchain technology, DIDs are globally unique, easily accessible, and cryptographically verifiable. A decentralized identifier can be connected with various entities, including individuals, organizations, and government agencies. Because DIDs are maintained on the blockchain, anyone can validate an attestation by comparing it to the issuer’s DID.

Decentralized identifiers make sure that attestations are self-controlled and verifiable. Decentralized identifiers are also critical for protecting personal data privacy through decentralized identity. For example, if a person offers proof of an attestation (such as a diploma), the verifying party is not required to confirm the authenticity of the information in the proof. Instead, the verifier simply requires cryptographic assurances of the authenticity of the attestation and the identification of the issuing organization to check whether the proof is genuine.

Difference Between DID Technology and Traditional Identity Verification

Unlike traditional identifiers like our social security numbers or email addresses, which are issued, administered, or controlled by central entities, DIDs are issued, kept, and controlled by individuals. To verify traditional identifiers, individuals need to turn to centralized authorities and third-party agencies. In contrast, since decentralized identifiers are stored on open and trustless blockchains and with the help of cryptographic techniques, DID solutions enable individuals to verify and manage their identities while protecting their privacy.

Decentralized Identity in Crypto Wallets

Moreover, with a number of crypto wallets already equipped with decentralized identity services, users can now store and share their decentralized identifiers and attestations with just a few clicks. For example, ONTO Wallet has integrated ONT ID, the decentralized identity framework developed by Ontology Network. Users can create a digital identity in the wallet, which can be used to manage all wallets in the app. In other words, ONT ID can help replace the traditional password-based login and grant you access to all services in the wallet. This would make it a lot easier for users to navigate the Web3 world without having to memorize long passwords for different services. And don’t forget, with ONT ID, users also have full control of their data and identities. Find out more use cases for ONT ID and give it a try in ONTO Wallet.


Thanks to the rapid rise of blockchain and decentralized technologies, DID technology is quickly emerging as a powerful tool for enhancing security and privacy in the world of cryptocurrency. By giving users greater control over their identity information, enhancing privacy and security, and providing strong authentication capabilities, DID can help minimize the risks associated with using crypto wallets and other blockchain-based platforms. As we move towards a more decentralized future, the promising DID technology will increasingly play a crucial role in ensuring the safety and privacy of users and their personal data.

About ONTO Wallet

ONTO is a DID-based gateway for a seamless Web3 experience. The best all-in-one option for securely managing your identities, data, and digital assets, ONTO allows you to manage your crypto assets (including NFTs), perform cross-chain swaps, readily access a variety of dApps, and learn everything important in real time via ONTO news feed.

With ONTO Wallet, users can create an ONT ID, a decentralized digital identity that enables one-click multi-chain wallet address creation and management and fully protects their private data through an encryption algorithm. Users worldwide can download ONTO Wallet now via or their mobile app store. Desktop users can also install ONTO Web Wallet for web browsers.

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