Skip to Content Home page

Digital identity
— The big shift

Welcome to the new web. It’s not like the old web and it demands a new approach to identity. Data structures and commercial relationships will be markedly different in the Web3 era, requiring verification methods that are more streamlined, secure, and trustworthy to support them.

Existing online identity mechanisms are a poor adaptation of physical ones. All too often, companies use scanned copies of sensitive ID documents such as passports, sent over unsecured channels such as email, which is an inefficient and often times dangerous practice.

Documents can be forged, and identity credentials are usually still centrally held and vulnerable to misuse or theft. Stolen identity information litters the dark web.

The time is right for a new type of identification, created with digital channels in mind. Built for Web3, it will be irrefutable, immutable, and controlled entirely by the person that owns it.

What is Web3

What is Web3?

Web3 is the latest iteration of a journey that began over 30 years ago when Tim Berners Lee turned on the first web server at CERN. The early days of this environment, which we refer to as Web0, focused on simple information publishing. It needed little, if any, identity verification, relying instead on first-person cookies where it collected data.

Web1 changed everything by introducing e-commerce. Consumers began interacting more with online services in the mid-nineties as sites like the BBC, Wired, and the Economist ventured into this new space. Soon-to-be e-commerce giants like Amazon and eBay emerged around the same time. Password-protected accounts became the prevalent method of authentication.

The rise of social networking and other sites promoting user-generated content in the early 2000s ushered in the era of Web2. This sparked debates over whether people should be forced to use their real IDs versus fake accounts when posting.

At the same time, the continuing digitization of commerce and public services coincided with the rise of mobile computing. Two-factor authentication (2FA) became more prevalent as mobile devices became part of the process, even verifying users by collecting biometrics.

What is Web3

Enter decentralization

These developmental stages of the web are intertwined, often overlapping each other and sharing one characteristic – relying on centralized services. As they evolved, they eventually held (and often legally owned) all of the users’ data, from bank balances to personal pictures. Following the natural aggregation of market share and move to cloud computing, a relatively small number of big tech players control most users’ assets and digital identity information.

Web3 will change that relationship, transitioning the creation and storage of assets and identity information to decentralized blockchain models that are often owned and managed by no single entity – the foundation for Web3’s big shift.

That transition also changes the model of digital ownership. In Web3, individuals have full ownership and control of their digital creations and assets and the movement of assets is recorded on a blockchain instead of on a central company’s servers.

For example, in-game digital assets like avatars or weapons that video game players buy are historically stored as a record in the gaming company’s database.

The company controls them and restricts the use of these assets to a single game. Conversely, when a video game player buys those assets as non-fungible tokens (NFTs) on the blockchain, it prevents the gaming company from altering them or revoking ownership. It also gives these assets more utility because they could be used in other games and tradable on third-party platforms.

What is Web3

How Web3 will change commerce?

Web3 isn’t just about video games and digital collectibles. Like the other iterations of the web, it will complement and enhance previous online business models by streamlining them. It has the potential to remove friction for traditional commerce.

For example, blockchain technology could reduce the time required for verification of applicants for mortgages and other loans, which is currently a time-consuming manual process. A Web3-based digital identity system would enable applicants to quickly prove facts about themselves, such as their identity, employment, and income, by allowing a bank and other companies to scan their digital wallet so the applicant can access products and services faster.

This fast verification capability promises to unlock liquidity, save time and cost, and provide faster, more equitable access to public services including healthcare. But for any of that to happen, we must transform traditional concepts of online identity.

Updating digital identity

Updating digital identity for Web3

As Web3 decentralizes commerce, identity must also decentralize. Web3 identity credentials will be stored securely on devices owned by users, and records of who signed them will be stored in public data repositories, including blockchains.

These identities will comprise facts about a person such as their name, age, and address, but could also include other information such as music streaming logs, memberships, and credit scores. The owners of that information can use their digital wallets to store their credentials and share them with whomever they choose. Third parties can set up rules for identity criteria based on their requirements.

This decentralized identity model carries several key advantages:

What is Web3


In a Web3 environment, people control their own identity information. They decide who sees it. They can grant that access at a more granular level, revealing facts about themselves on a need-to-know basis. In the old model, you might have to show your driver’s license just to prove your age, giving the attendant at the liquor store or the bouncer at the bar access to your name and address. Decentralized identity aims to solve for this problem.

What is Web3


When using the old model, you could not be certain how an organization stored your identity credentials or who it shared them with. This led to countless privacy breaches. Decentralization puts you in full control of your identity credentials and makes it accessible on your terms. It also means there are no single points of failure, because instead of allowing third parties to store your data in a centralized server, a third-party would only get access to it for a set period of time.

What is Web3

Immutable and irrefutable

Encrypted records of digital identity signatures stored on the blockchain make it impractical for a malicious party to tamper with identity information, making it highly trustworthy. A third party will not be able to alter someone’s identity signature.

A long journey ahead

Reimagining both the nature of the web and the concept of digital identity together is a challenging and complex task, involving many stakeholders. It will take some time, but this transition is already underway. Standards for digital identity, such as W3C, are in development and have received strong support from private and public sector institutions alike.

These standards will allow interoperability across a wide range of centralized and decentralized services. This ability to exist in both the old web space and the new one is key. Both usage models must coexist with each other in an environment as large, complex, and diverse as the web.

This article is part of a series on digital identity.

By Tyrone Lobban, Head of Blockchain Launch and Onyx Digital Assets, Onyx by J.P. Morgan and George Kassis, Vice President, Digital Identity Lead, Blockchain Launch, Onyx by J.P. Morgan.

Contact us to collaborate on your digital identity journey.

An error has occured.

Sorry, but there was a problem submitting the form. Please try again.

Submission failed to send.

Looks like there's a problem with the server. Please wait and try again.


All fields have been entered correctly, the form will be submitted.

I want to learn how Onyx can help me

Please select a topic or interest.

Your inquiry was successfully sent.

Back to top