March 13, 2025  

By: Jean-Philippe Beaudet 

Digital identity systems are becoming increasingly common worldwide, with over 90% of countries storing identification information digitally. Among these, 67% support in-person digital identity verification or authentication, and nearly 40% issue digital IDs capable of remote authentication for online services and transactions.1 These digital IDs are used to provide services to citizens, track individuals who may pose security risks, and prevent identity theft and fraud. 

Unfortunately, despite the advanced countermeasures designed to prevent counterfeiting and fraud, fake IDs — both physical and digital — continue to circulate widely, particularly on American college campuses. Meanwhile, stolen documentation complicates efforts to secure U.S. borders against illegal migration, not to mention the financial burden on Americans. Identity theft cost Americans over $43 billion in 2022 alone. Blockchain Identity Credentials (BICs) offer enhanced security and data fidelity to protect Personally Identifiable Information (PII) from theft and fraud. According to the University of Texas at Austin’s Center on Identity, BICs could have prevented an estimated $1.59 billion in fraud and identity theft cases between 2000 and 2020.2 

Preventing Identity Fraud with Immutable Records 

Blockchain’s immutable decentralized ledger is a natural solution to the growing challenge of identity fraud. Once an identity is recorded on the blockchain, it cannot be altered or manipulated without detection. Each transaction involving a user’s digital identity – whether authentication for government services, financial institutions, or healthcare systems – can be securely logged, ensuring the integrity of their personal data. This capability drastically reduces the risk of counterfeit documents or the use of stolen credentials, strengthening border security and making it harder for adversaries to exploit weak points in identity verification systems. 

Securing National Identity Databases 

Traditional identity databases are prime targets for hackers, with breaches of government and corporate systems often resulting in massive leaks of sensitive personal information. In August 2024, a breach of National Public Data systems exposed an estimated 2.9 billion records, including names, addresses, and Social Security numbers.3 BICs reduce this risk by spreading control of personal data across multiple points, rather than storing it in one central system. Using cryptographic keys, only authorized entities can access this information, making it far more difficult for hackers to steal data. This approach makes BICs powerful tools for protecting national databases, securing citizens’ identities, and defending against cyber espionage and digital terrorism. 

Empowering Citizens with User-Owned Identities 

One of the most significant advantages of using BICs is the built-in concept of user-owned identity, which gives individuals full control over their personal data. Rather than disclosing entire documents, citizens can selectively share specific pieces of personally identifiable information (PII) as credentials for bespoke purposes—for example, proving they are old enough to buy alcohol without revealing their exact birthdate or home address. This approach enhances privacy while still providing governments and other entities with the verifiable data they need for security checks. By limiting the exposure of sensitive information, self-sovereign identity systems reduce the risk of identity theft and minimize unnecessary data collection. 

Enhancing Border Security and Immigration Control 

Blockchain Identity Credentials can significantly improve the efficiency and security of border control, customs, and immigration processes. By leveraging BICs to authenticate digital IDs in real-time, customs and immigration officials can instantly verify the legitimacy of travel documents and visas, reducing wait times and improving the detection of fraudulent credentials. BICs also enable better tracking of individuals of interest—such as those on watchlists or with criminal histories—while maintaining transparency and accountability. By streamlining identity verification, blockchain enhances immigration control and strengthens national borders against security threats. 

The Digital Chamber will continue to collaborate with policymakers, researchers, and industry leaders to advance the integration of blockchain into identity management systems to foster innovation and protect the identities and safety of U.S. citizens. 

  1. Metz, A., Casher, C., and Clark, J. 2024. ID4D Global Dataset Volume 2: Digital Identification Progress and Gaps. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO.
  2. How Much Identity Management with Blockchain Would Have Saved Us? A Longitudinal Study of Identity Theft. R. Nokhbeh Zaeem, K. Suzanne Barber, UT CID Report #20-14, July, 2020. Pp 9-11.
  3. Emily DeLetter, Social Security Hack Exposes 2.9 Billion Records in National Public Data Breach. USA Today. August 15, 2024. https://www.usatoday.com/story/tech/2024/08/15/social-security-hack-national-public-data-breach/74807903007/