At the heart of this transformative journey lies the concept of decentralised identity. Unlike traditional identity systems controlled by central authorities, decentralised identity empowers individuals to fully own and control their digital identities. The potential applications of decentralised identity are vast, spanning across sectors such as finance, healthcare, education and government services.
In the financial industry, decentralised identity can streamline Know Your Customer (KYC) processes, reduce fraud and enhance the customer onboarding experience. A survey by Deloitte found that 81% of executives believe that blockchain-based digital identity solutions can help reduce KYC and customer onboarding costs by up to 50%.
According to a report by Markets and Markets, the global decentralised identity market is expected to grow from $285 million in 2021 to $6.8 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 88.2%. This rapid growth is attributed to the increasing need for secure and privacy-preserving identity solutions across various industries.
As decentralised identity solutions continue to evolve, addressing scalability and interoperability challenges remains a key focus. Initiatives such as the Decentralized Identity Foundation (DIF) and the Hyperledger Aries project are working towards establishing standards and protocols to ensure seamless integration across different blockchain networks and identity systems.
Governments are also exploring the potential of decentralised identity to enhance citizen services and reduce identity fraud. Estonia, a pioneer in digital governance, has implemented a blockchain-based decentralised identity system called e-Estonia, which enables citizens to access various government services securely using their digital identities. According to the Estonian government, the system has saved over 1,400 years of working time and reduced bureaucracy by enabling secure digital signatures and electronic voting.
As the adoption of cryptocurrencies and blockchain technologies accelerates, countries are taking steps to formalise their regulatory frameworks. Ukraine, for instance, plans to legalise cryptocurrency by early 2025, with a focus on implementing a securities-based taxation model. While no special tax benefits are expected for crypto transactions, this development marks a significant step towards integrating digital assets into the country's financial system and aligning them with standard taxation practices.
The Bank of England's regulatory arm has requested local firms to disclose their current and future crypto exposure by March, aiming to monitor stability and shape future policy. This increased scrutiny highlights the growing importance of regulating the crypto industry to ensure its sustainable growth and integration with traditional financial systems.
Societe Generale, one of Europe's leading financial institutions, has made history by conducting the first on-chain repo transaction with a European central bank. Through its digital assets-focused subsidiary, SG-Forge, Societe Generale deposited bonds issued on the Ethereum blockchain as collateral in exchange for central bank digital currency (CBDC) issued by the Banque de France.
This groundbreaking transaction demonstrates the potential of blockchain technology to revolutionise interbank refinancing operations and improve the liquidity of digital financial securities.
Meanwhile, the adoption of blockchain technology is not limited to the banking sector. Solana, a leading blockchain platform, has emerged as a frontrunner in the deployment of AI tokens and market capitalisation. With 206 AI agent tokens and a market cap of $5 billion, Solana has surpassed all other chains, demonstrating the immense potential of AI-powered solutions on blockchain networks. Moreover, Solana's ecosystem has attracted an impressive 7,625 new developers in 2024, overtaking Ethereum's long-standing dominance and signifying the growing interest and confidence in its capabilities.
However, Ethereum remains a significant player in the crypto space, with asset management giants BlackRock and Fidelity making substantial investments in the cryptocurrency. The two firms purchased a combined $500 million worth of Ethereum (ETH) in just two days, reflecting the rising demand for Ethereum ETFs and the institutional appetite for this leading digital asset.
Stefano Virgilli
The author is a member of the International Press Association.
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