The global decentralized identity market was valued at approximately USD 647.80 million in 2022 and is anticipated to experience remarkable growth, projected to achieve a compound annual growth rate (CAGR) of 90.3% from 2023 to 2030. This surge is largely driven by heightened privacy and security concerns in today’s digital landscape. Traditional centralized identity systems limit individuals' control over their personal data, raising significant worries about data breaches and unauthorized access. In contrast, decentralized identity (ID) solutions empower individuals to own and manage their digital identities, offering a more secure and privacy-focused alternative.
Influence of Blockchain Technology
The advent of blockchain technology has significantly facilitated the development of decentralized identity solutions. Blockchain acts as a transparent and immutable ledger, securely storing and verifying identity information. This technology eliminates the need for intermediaries, creating a trustless environment where identity verification can occur directly between parties. This direct interaction not only reduces costs but also enhances operational efficiency. Additionally, the growing demand for seamless and frictionless user experiences is further accelerating the adoption of decentralized ID solutions on a global scale.
Gather more insights about the market drivers, restrains and growth of the Global Decentralized Identity Market
Simplification of Identity Verification
Traditional identity verification methods can often be complex, requiring multiple usernames, passwords, and various authentication methods. Decentralized identity solutions streamline this process by offering a single, portable digital identity that can be easily verified across various platforms and services, thereby enhancing the overall user experience. Moreover, regulatory requirements and compliance standards, such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR) in Europe, are driving organizations to implement decentralized identity solutions. These regulations mandate responsible handling of personal data and empower individuals with greater control over their information, aligning perfectly with the principles of decentralized identity.
Segmentation Analysis:
Identity Type Insights: Biometric Identity
In terms of identity type, the biometric segment led the market in 2022, capturing over 64.0% of the revenue share. Biometric identifiers, including fingerprints, facial recognition, iris scans, and voice recognition, provide high levels of precision and security for identity authentication. This method is considered highly reliable as it is challenging to forge or replicate, fostering trust in digital interactions. Furthermore, biometric authentication offers significant convenience; individuals can quickly confirm their identity using their unique biological traits, eliminating the need for passwords or traditional authentication methods that can be easily compromised or forgotten.
Non-Biometric Identity
The non-biometric segment is expected to witness substantial growth during the forecast period. The increasing demand for non-biometric identity solutions is driven by their portability and convenience. Additionally, non-biometric authentication often serves as a backup for biometric password-less security, further contributing to the segment’s anticipated growth.
End-User Insights: Enterprises
Among end-users, the enterprises segment dominated the market in 2022, accounting for over 65.0% of the revenue share. This growth is primarily driven by the need to mitigate business risks. A decentralized identity framework allows enterprises to manage users' identities independently of the identity issuer, reducing the initial requirement to gather and store personal data.
Individuals
The individual segment is projected to register the fastest CAGR of 91.6% during the forecast period. This growth can be attributed to the increasing adoption of decentralized identity solutions by individuals for creating and managing their identities. These solutions facilitate verification and authentication across various processes, such as loan approvals and opening bank accounts, thereby driving demand for decentralized identity among individual users.
Enterprise Size Insights: Large Enterprises
In terms of enterprise size, large enterprises led the market in 2022, holding over 67.0% of the revenue share. The demand for decentralized identity solutions is rising among large enterprises as they actively seek to mitigate identity risks. For example, in August 2022, Litentry, a multi-chain identity protocol, partnered with Node Real, a blockchain infrastructure provider. This collaboration allows Litentry to integrate NodeReal's MegaNode, which offers powerful real-time and historical data indexing across the Ethereum and Binance Chain networks.
Small and Medium Enterprises (SMEs)
The small and medium enterprises (SMEs) segment is expected to experience the fastest CAGR of 90.8% over the forecast period. SMEs are increasingly digitizing their services to enhance customer experiences. The application of blockchain technology in identity management is seen as a way to protect private information while improving accountability and trust between parties. Furthermore, SMEs stand to benefit from enhanced product and service efficiency, improved supply chain management, and innovative blockchain-driven business models.
Vertical Insights
Banking, Financial Services, and Insurance (BFSI)
In terms of industry verticals, the BFSI sector dominated the market in 2022, accounting for over 19.0% of the revenue share. Banks are required to conduct Know Your Customer (KYC) checks to verify customer identities and ensure compliance with regulations, preventing involvement in illegal activities like bribery or money laundering. Notably, the U.S. allocates approximately USD 25 billion annually for Anti-Money Laundering (AML) compliance. Additionally, major banks reportedly spend up to USD 500 million each year on cybersecurity measures, underscoring the critical need for effective identity verification.
Telecom and IT
The telecom and IT segment is projected to grow at the fastest CAGR of 92.1% during the forecast period. With the increasing digitization of communication and a rising demand for secure identity verification, this sector is actively exploring decentralized identity solutions to improve user experiences and enhance security. Telecom and IT companies handle vast amounts of sensitive customer data, including personal information and authentication credentials. By adopting decentralized identity solutions, they can empower customers with greater control over their identity information while bolstering data privacy and protection.
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