Decentralized Identity Market Overview: Current State and Future Trends
The global decentralized identity market was valued at USD 647.80 million in 2022 and is projected to expand at an impressive compound annual growth rate (CAGR) of 90.3% from 2023 to 2030. This market growth is driven by heightened privacy and security concerns in the digital space. In traditional, centralized identity systems, users have limited control over their personal data, leading to worries about data breaches and unauthorized access. Decentralized identity (ID) solutions offer a more secure, privacy-focused alternative by giving individuals full control over their digital identities.
The emergence of blockchain technology has been crucial for the development of decentralized identity solutions. Blockchain’s transparent and immutable ledger securely stores and verifies identity data, removing the need for third-party intermediaries and creating a trustless environment. This method reduces costs, improves efficiency, and directly supports identity verification between involved parties. Additionally, a rising demand for smooth, frictionless user experiences is boosting global adoption of decentralized ID solutions.
Gather more insights about the market drivers, restrains and growth of the Global Decentralized Identity Market
Traditional identity verification can be time-consuming, often requiring multiple usernames, passwords, and authentication steps. Decentralized identity solutions streamline this process by providing users with a single, portable digital identity that can be verified across various platforms and services, simplifying the overall experience. Further driving this shift, regulatory and compliance standards like the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) in Europe demand that companies handle personal data with care and allow individuals greater control. Decentralized identity solutions support these standards by ensuring that individuals can own and control their data.
The rapid digitalization of sectors like finance, healthcare, and e-commerce is accelerating demand for decentralized identity solutions as these industries require secure identity verification to protect sensitive data. Decentralized identity technology provides a reliable and tamper-resistant method for identity verification, helping mitigate risks associated with identity theft and fraud.
Nevertheless, the market faces challenges regarding adoption and interoperability. While decentralized identity offers numerous benefits, shifting from traditional identity systems to decentralized models involves complex changes to infrastructure and user habits. Additionally, different decentralized identity platforms may use varying standards and protocols, creating interoperability issues across systems. To address these challenges, industry collaboration and open standards development are necessary. Stakeholders such as technology providers, industry associations, and regulatory authorities need to work together to create shared frameworks and interoperability standards for decentralized identity solutions.
Vertical Insights
The banking, financial services, and insurance (BFSI) segment held the largest revenue share in 2022, accounting for over 19.0% of the market. Banks are mandated to perform Know Your Customer (KYC) checks to verify customers' identities and prevent illegal activities like bribery and money laundering. In the U.S., an estimated USD 25 billion is spent on Anti-Money Laundering (AML) compliance efforts. Moreover, major banks spent up to USD 500 million annually on cybersecurity as of April 2019, according to Forbes, underscoring the significant costs associated with traditional identity systems.
The telecom and IT sector is expected to register the fastest CAGR of 92.1% throughout the forecast period. As communication continues to digitalize and the need for secure identity verification grows, telecom and IT companies are exploring decentralized identity solutions to enhance user experience and security. These companies handle extensive amounts of sensitive customer data, including personal information and authentication details. By adopting decentralized identity solutions, telecom and IT firms can offer customers greater control and ownership of their identity data, thus bolstering data privacy and security.
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