Intro to IDtech: How Decentralized Identity Will be Adopted
This is the second post in a series about IDtech, a category of products that empower users to take control of their identity, share their data safely, and more securely access the things they need. The first post, IDtech is the New Fintech is available to read on Forbes.
If a tree falls without anyone around to hear it, did it really happen?
An ever-increasing number of people have caught the vision of the future that self-sovereign identity (SSI) promises. It’s a world where people possess a universally-accepted, user-centric digital identity so that everything they’re eligible for or entitled to is one tap away, while remaining in control of their own data.
But if decentralized identity technologies are developed without achieving widespread end-user adoption, did it actually accomplish anything?
The way to achieve adoption is simple (albeit challenging to execute): the key is lots of well-executing teams building useful products. “IDtech” is a term to talk about that very thing.
Adoption is the Goal
I’ve spoken and written at length about the gnarly cold start (or, “chicken and egg”) problem that threatens the realization of self-sovereign identity. The utility of a digital identity is a function of the useful applications it has. Like a Visa card, a digital ID is really valuable when a broad marketplace of organizations are willing to accept it — and basically worthless in isolation.
That’s why adoption must be the paramount objective of the identity community. That’s why I’ve said that I believe that the least interesting things to talk about are blockchain, data standards, serialization & communication protocols, signature schemes, decentralized PKI, and the other technology components that collectively make up “web5”. Adoption is the north-star of Trinsic, the decentralized identity infrastructure startup I co-founded that hundreds of developers use to build products.
But exactly how will adoption occur? The answer isn’t obvious, but it is simple.
Four Possible Ways SSI Could be Adopted
I’ve spoken to hundreds of people about SSI adoption — including those among the most qualified in the world to opine on the subject. Their ideas all boil down to one of the options in the below matrix — that adoption will be driven by either organizations or people, and that it will be bottom-up or top-down*.
Influencers: People-driven, top-down adoption
The least popular of the four quadrants, influencers represent an opportunity to create demand with hundreds of millions of people. However, it’s an extremely expensive strategy to execute and it’s unclear how initial utility would be built. That said, it could have massive payoff if someone can pull it off.
Communities: People-driven, bottoms-up adoption
The most “in vogue” quadrant, community-driven adoption is the idea that SSI could take off by individuals spreading SSI to other individuals like they did with Bitcoin and DAOs. Organic growth without centralized organizations capturing the community is a captivating idea, but the pragmatist in me immediately questions where the incentives lie. Identity requires trust to function — something that’s hard to crowd-source and straightforward for reputable organizations to provide.
Queen bees: Organization-driven, top-down adoption
The “queen bee” strategy describes influential organizations (governments, financial institutions, big tech, etc.) mandate (or provide) verifiable credentials to their existing users. Example: a utility company begins issuing “verified address” credentials to customers in their municipality, enabling solar installers, telcos, and retailers to easily verify people.
When I hear businesspeople talk about the opportunity in SSI, they’re talking about this quadrant 99% of the time. The challenge is that — surprise! — governments & other incumbents move slowly and adopt new technology carefully. Because verifiable credentials need to be trustworthy to be useful, top-down adoption is important — but it’s not the solution. If our industry keeps focusing exclusively on queen bees I’ll have grey hair before we see meaningful adoption.
Innovators: Organization-driven, bottoms-up adoption
This quadrant is the golden quadrant. Bottoms-up adoption by organizations refers to innovative teams solving a new problem or launching a new product. Innovators can exist within startups, R&D departments at large corporations, or product teams within growth-stage companies.
Despite this being, in my opinion, the most exciting quadrant, few understand or discuss it. I believe this is because our lexicon lacks a way to express it. The goal of this series of posts is to change that.
Adoption is Driven by Great Products
The decentralized identity ecosystem will be adopted the same way that basically every other mature ecosystem has developed.
Think about the internet. After a quick glance of the top 100 websites, I count maybe 10 belonging to companies that existed prior to 1995 (CNN, BBC, etc). These dominant websites weren’t launched by incumbents. Netflix wasn’t built by Blockbuster or DirecTV. PayPal wasn’t built by Visa or Western Union. Amazon wasn’t built by Sears or Walmart. Even a decade after the internet took off, it’s the good products that win. Airbnb wasn’t built by couchsurfer.com or VRBO, and Robinhood wasn’t built by Fidelity or Shwab.
From the recent wave of FinTech successes to the centuries-old world of retail and everything in between, successful ecosystems are built by innovative teams who build better products than their predecessors. Despite people’s love for making things complicated, the answer is really that simple.
While well-intentioned, all the academic analysis, decentralized governance, value chain mapping, or market sizing in the world won’t get us any closer to SSI adoption. Solid product work is what will get us there–researching low-friction UIs, building sustainable business models, baking interoperability in, and iterating quickly are all examples of good product work. And this needs to be done by lots of people in lots of industries and lots of use cases. 1,000 nimble teams taking products to market will teach us so much more than 10 “queen bee” companies ever would.
IDtech Products will Unlock SSI adoption
IDtech is the name we’ve begun using to describe the organization-driven, bottom-up adoption motion. It gives us a term to describe products instead of philosophies, initiatives, concepts, or technologies. If a fintech product helps you manage your money, an IDtech product helps you manage your identity and data.
IDtech products can deliver the convenience, optionality, and accessibility that fintechs bring to money into the archaic, paper-based world of personal and organizational identity. It can make brand new product experiences possible for the first time — and building an IDtech product is easier now than it’s ever been thanks to infrastructure like Trinsic and the commoditization of ID proofing. Identity today is where financial services was 15 years ago — and therefore represents one of the largest opportunities of this generation.
Self-sovereign identity will be adopted as thousands of innovators launch IDtech products that solve real problems for users. Queen bees will continue their trajectory as well and the convergence of the two will accelerate the value users get from their digital identity.
These ideas continue to develop. If you have feedback for me, or if you’re building an IDtech product, I’d love to hear from you — my DMs are open on Twitter and LinkedIn. If this post was insightful, please share it with others that will learn from it, and follow me so you don’t miss subsequent posts where I’ll dive deeper into the concepts and practices behind successful IDtech products.