Crypto heads into 2026 with privacy, decentralized identity on the line

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For years, Ethereum co-founder Vitalik Buterin has advocated for privacy successful the crypto space. Buterin argues that onboarding users unsocial is not enough, cautioning that wide usage of “walled gardens” would undermine the halfway intent of decentralized systems.

“The extremity is not to onboard radical to Ethereum. The extremity is to onboard radical to openness and self-sovereignty,” helium precocious wrote connected a X post.

Buterin is 1 of crypto’s astir salient advocates for privateness arsenic an industry's halfway value, emphasizing idiosyncratic extortion from authorities and firm surveillance and arguing that decentralization helps disperse powerfulness distant from a fewer ascendant actors.

This year, decentralized individuality emerged arsenic 1 of the industry’s astir progressive responses to integer surveillances. Rather than converging connected a azygous planetary identifier, caller efforts progressively stress selective disclosure enabled by caller technologies, allowing users to beryllium circumstantial attributes, specified arsenic uniqueness, eligibility oregon compliance, without revealing their afloat identity.

The displacement reflects a broader situation facing blockchains, applications and regulators alike: however to verify users without turning networks into surveillance systems.

Ethereum becomes the main investigating ground

Unsurprisingly, Ethereum has emerged arsenic 1 of the main investigating grounds for decentralized individuality and privacy-preserving infrastructure.

In an Oct. 29 thread, Ethereum’s X relationship said much than 750 privacy-focused projects were gathering connected the network, galore addressing identity, credentials and selective disclosure alternatively than anonymous payments alone.

The thread was met with praise from the community, with the Book of Ethereum, a community-run relationship focused connected Ethereum’s civilization and ethos, responding with a station that described privacy, zero-knowledge tools and human-centric individuality arsenic an “unfolding reality” connected Ethereum alternatively than a distant ideal.

Buterin has besides weighed successful straight connected decentralized individuality successful penning this year.

In a June 28 essay, helium warned that aboriginal attempts to regenerate centralized logins with a single, persistent onchain ID tin inactive present superior risks, arguing that adjacent privacy-preserving individuality systems whitethorn alteration semipermanent tracking, coercion oregon nonaccomplishment of anonymity erstwhile excessively overmuch enactment is tied to 1 identifier.

Instead, Buterin advocates for attribute-based verification, wherever users beryllium lone what a circumstantial exertion needs to cognize alternatively than presenting a azygous planetary identity. Zero-knowledge proofs are the instrumentality that makes this imaginable by allowing a idiosyncratic to beryllium a connection is existent without revealing their underlying idiosyncratic information.

In Buterin’s framework, this attack preserves privateness portion avoiding the dangers of consolidating individuality into a single, imperishable integer ID. In December, Buterin suggested that Elon Musk should instrumentality zero-knowledge proofs and blockchain-based systems connected X to show that its content-ranking algorithms run fairly.

From enterprises to proof-of-personhood systems

Beyond Ethereum, enterprise-focused individuality platforms precocious successful 2025. In August, the Hashgraph Group launched IDTrust, a self-sovereign individuality level built connected the Hedera network, positioning it arsenic a decentralized enactment for governments and institutions exploring integer credentials.

Proof-of-personhood systems, which purpose to verify that an relationship corresponds to a existent and unsocial quality alternatively than a bot oregon duplicate, besides continued to germinate successful 2025, with Sam Altman's World remaining the astir salient example.

World’s individuality protocol, World ID, is designed to fto users beryllium they are real, unsocial humans online without revealing idiosyncratic data. According to the project’s documentation, aft biometric verification done an iris scan, the information is encrypted, sent to the user’s device, and deleted from the verification hardware, truthful lone the idiosyncratic controls their World ID, with nary idiosyncratic accusation shared with 3rd parties.

While its biometric-based attack targets quality uniqueness astatine scale, critics person raised ongoing concerns astir privacy and coercion.

The resurgence of decentralized individuality successful 2025 has besides drawn attraction from starring figures successful crypto. In June, Coinbase CEO Brian Armstrong framed decentralized individuality arsenic a cardinal pillar of the internet’s adjacent phase, writing that it is “taking off” alongside decentralized societal media and prediction markets.

Digital individuality meets authorities surveillance concerns

As governments determination toward integer individuality systems, questions astir information power and privateness are becoming much consequential.

In Switzerland, a state often cited for its beardown privateness tradition, proposed surveillance reforms person drawn renewed scrutiny. In January, the Swiss Federal Council proposed revising the OSCPT (Ordinance connected the Surveillance of Postal and Telecommunication Correspondence) to grow monitoring obligations for telecom providers and widen those requirements to services specified arsenic societal networks, messaging apps and VPNs.

As drafted, the changes would necessitate work providers with astatine slightest 5,000 users to verify identities and decrypt immoderate communications that are not protected by end-to-end encryption.

The connection received beardown pushback. Decentralized VPN provider Nym urged Swiss citizens to interaction their elected officials and combat backmost against the proposal. The institution wrote:

At a clip erstwhile the Swiss are celebrating the occurrence of starring privacy-preserving companies specified arsenic Proton and Threema, erstwhile the service itself has chosen to usage Threema, and erstwhile different promising players, specified arsenic Nym, are emerging successful the tract of privacy-friendly technologies and the extortion of people's integer integrity, this ordinance by the Federal Council is destroying an full sector.

In July, the privacy-focused tech institution Proton said it had frozen investments successful Switzerland amid the uncertainty surrounding the proposal, redirecting $100 cardinal toward information centers successful Germany and Norway.

On Dec. 10, Switzerland’s Council of States moved to rein successful the projected enlargement of telecommunications surveillance, tacitly backing a question that calls connected the Federal Council to reconsider the reform.

In the United Kingdom, the Concordium blockchain launched a mobile app successful August that lets users beryllium they are implicit 18 utilizing zero-knowledge proofs, without revealing their identity. The merchandise came arsenic the UK rolled retired mandatory online age-verification rules for big content.

In the United States, Google announced an enlargement of government-issued integer IDs successful Google Wallet crossed aggregate US states successful April, enabling mobile ID usage astatine DMVs and TSA checkpoints.

The update besides introduced zero-knowledge proofs for property verification, highlighting that the exertion is nary longer constricted to crypto-native projects, but is progressively being adopted by Big Tech platforms arsenic portion of mainstream integer individuality systems.

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