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On a general level, self-sovereign identity is intended to preserve the right for the selective disclosure of different aspects of one's identity and the various components thereof, in different domains and contextual settings. This right should apply irrespectively of whether these aspects and components have been issued by a particular government, company, or organization. More specifically, self-sovereign identity also refers to the idea that individuals shall retain control over their personal data and, to a certain degree, over the representations of their identities (or personas) within a particular identity management system. This requires giving them the ability to establish (and control) who has the right to access specific pieces of information about them, with a high degree of granularity.

The European Commission (EC) proposed a framework for a European Digital Identity which will be available to all citizens, residents, and businesses in the European Union. The proposed European Digital Identity wallets will enable holders to prove their identity and share electronic documents with the click of a button on their smartphone. They will be able to access online services with their national digital identification, which will be recognized throughout Europe. Very large platforms will be required to accept the use of European Digital Identity wallets upon request of the user, for example to prove their age. Use of the European Digital Identity wallet will always be at the choice of the user.

"Korea's BankID, a decentralized identity (DID) solution called MyInfo, went live on August 27 with seven banks. The solution was a joint development between the Korea Financial Telecommunications and Clearings Institute (KFTC) and Raon White Hat, a subsidiary of Raon Secure, the developer of the OmniOne blockchain... Users create a digital identity with any of the banks by providing the usual sort of documents. The details of the digital identity that's created are securely stored on the user's smartphone. The customer can use the DID for bank logins and if the person wants to make an application at a different bank, they can share selected details from MyInfo with the other bank. The wallet stores details such as mobile phone number, address and e-mail. It also includes a bio identity, which may involve facial recognition."

Microsoft is building a decentralized identity network atop of the bitcoin blockchain. The Identity Overlay Network is based on an evolving set of open standards developed in conjunction with the Decentralized Identity Foundation.

Microsoft's Project ION (Identity Overlay Network) will allow users to mint decentralized digital identities, which aim to act as an immutable replacement for email addresses and usernames, and potentially a vault for sensitive personal data. These identities will be used to seamlessly access online applications without the need to indiscriminately surrender personal data. They could also be used in real-life applications by allowing doctors to cryptographically verify the medical details of patients, or university students to verify their qualifications. To scale to the capacity needed, Microsoft has built Project ION as a Layer 2 network, similar to Lightning but with no tokens and no signatories. Using the underlying protocol Sidetree, ION batches transactions and anchors them with a single hash, increasing efficiency and pushing fees down to what would be just a "rounding error" to Microsoft.

Mu Changchun, the Director General of the People's Bank of China (PBOC), clarified how the managed anonymity of China's digital yuan works. Wallets come in multiple tiers, with small transaction value tiers supporting anonymity by requiring only a phone number as identity, but larger-value tiers requiring conventional proof of identity. Under China's Personal Information Protection Law, the telecom companies cannot release identity information to any third parties, including the central bank. However, if it's suspected that some anonymous transactions are illicit, law enforcement agencies can present a legal warrant to the phone company to get the user's identity. Also, all wallets have a sub wallet function in which each merchant can have a separate wallet to avoid linking a person across merchants.

The "Blockchain Trilemma" is a term used to describe the challenge of increasing performance, security, and decentralisation at the same time. Current enterprise blockchains are not truly decentralised. They may be structurally decentralised, but are operationally centralised. By reversing this, having structurally centralised, but operationally decentralised architecture, a CBDC can achieve a high-performance blockchain. However, any blockchain-based CBDC should not only solve the blockchain trilemma, but also the CBDC design trilemma, which notes that identity, privacy, and programmability cannot be easily enhanced at the same time. A CBDC cannot ignore privacy for the sake of achieving legal compliance and implementing programmable money. From an expertise point of view, the answer to this trilemma is the use of a decentralized identity system such as self-sovereign identity (SSID) to find the perfect equilibrium for the CBDC design trilemma. Self-sovereign identity is very popular for its advanced privacy protection. By having an SSID-based blockchain system, a CBDC can incorporate both privacy and transparency into the blockchain-based CBDC system. Additionally, a use of zero-knowledge encryption to protect the transaction privacy of blockchain data is highly recommended for any CBDC implementation.

The European Commission will provide a prototype of a EU Digital Identity Wallet (EUDI) as set out in the proposed European Digital Identity Regulation. The proposal aims to enable European citizens and businesses to share identity data in a secure and convenient way. The prototype wallet serves to trial and inform the specifications developed by Member States, as the common EU Toolbox to implement the EUDI. It will be tested in a number of large scale pilots that cover different sectors and will be made available for re-use by contributors as open source. Meanwhile the Brownstone Institute points to some of the EUDI's significant ethical and surveillance concerns that should be extensively discussed and debated by the public.

"The idea of digital identity is not new, but most discussion about the subject is not actionable or practical. The question is: What level of digital identity do you need to have in order to use certain services? How do we do this in a way that promotes compliance and satisfies the expectations of regulators and law enforcement? I believe the solution is a multilayered identity system. Imagine an Olympic games winners' podium-you have bronze, silver and gold. Each represents qualification for a financial account with corresponding levels of access and risk limits."

Fujitsu is developing a digital identity exchange technology that uses blockchain to prove reputation and improve trust in validating a user. It makes it possible for individual users and service businesses involved in online transactions to confirm the identity of the other parties.

Payments platform Nuggets is working with the Bank of England to develop a privacy and identity layer for a potential digital pound. The platform, which enables decentralized identity, plans to design a private and secure system to prevent the tracking and correlation of transactions, as well as prevent fraud and money laundering. Nuggets said that it plans to implement zero-knowledge proofs on its privacy layer, which will enable people to verify their identity without sharing their data. https://nuggets.life

Facebook's Libra white paper includes a brief but potentially seismic nod to digital identity standards. With 2 billion users worldwide, Facebook may be able to succeed where others have failed in jump-starting a globally accepted digital ID. Some identity experts say this is even more important than the cryptocurrency, but others question how much control Libra would give users and find its approach overbearing."

Microsoft is working on a Sidetree-based DID network, called ION (Identity Overlay Network) which runs atop the Bitcoin blockchain based on an emerging set of open standards that they developed with the Decentralized Identity Foundation.

The European Union (EU) Industry, Research and Energy Committee approved a proposed update to the European Digital Identity Framework that will enable the issuance and usage of the smartphone-based EU's European Digital Identity Wallet (eID). It would allow holders to identify and authenticate themselves online (via a European digital identity wallet) without having to resort to commercial providers. It would also give users full control of their data and let them decide what information to share and with whom.

Canada is making a big leap in modernizing identity verification, tapping blockchain technology to let consumers digitally prove who they are to securely access banking and other personal services.

IBM and Microsoft have released new technologies focus on tackling the challenge of identity on permissioned and public blockchains respectively. The approaches are different but they give us a glimpse of how innovation is evolving in this space.

Self-sovereign identity promises to return personal data to the people providing it rather than letting it sit precariously in the hands of businesses that have repeatedly failed to secure it.

Combining a self-sovereign digital identity system with a system of consent receipts not only ensures that a company handles its customers' personal data correctly, but also that a company can now recognise its customers no matter what products they buy.

This paper considers the various requirements for identification in the financial sector and the evolving nature of identity and its evolution from analogue to digitized to digital.The establishment of such utilities for digital or electronic identification requires addressing design questions such as registration methods, data availability and cross-jurisdiction recognitions. Yet, as with any reform, a balance between flow-through efficiency and cyber-security needs to be reached to ensure the objectives of financial inclusion and market integrity are not achieved at the detriment of financial stability.

The government of Catalonia has announced it will develop a DLT-based identity platform aimed to give citizens control of their own data when interacting with online services. The Catalan government will act as the validator for the network, but it will not collect users' personal data.