9.4 The Vision of Web3 and Digital Identity

What is Web3?

Web3 is often contrasted with Web2 by who “owns” the data. On Web2 (today’s internet), your accounts and data are locked into each platform (Google, Facebook, etc.). Web3 aims to flip that: you own your own identity and data, stored on the blockchain. For example, Ethereum.org notes that with NFTs “you can own a music MP3 file across all Ethereum-based apps and not be bound to one company’s specific music app like Spotify”. In other words, a digital asset or profile isn’t held by a central company—it lives on the blockchain and you control it.

Web3 vs. Web2: The Shift in Data Ownership

Web3 represents a fundamental evolution in how the internet operates, particularly when contrasted with Web2, the current version of the web dominated by centralized platforms. In Web2, users' accounts, personal data, and digital interactions are typically controlled by large corporations such as Google, Facebook (now Meta), or Amazon. This means your information is stored in silos—isolated databases owned by these companies—where you have limited control, and the platforms can change rules, restrict access, or monetize your data without your explicit consent. For instance, if a platform like Twitter (now X) bans your account, you lose access to your followers, posts, and history, often with little recourse. Web3 aims to reverse this dynamic by leveraging blockchain technology to enable true user ownership of data and identities. Blockchains are decentralized ledgers that distribute control across a network, ensuring no single entity can unilaterally alter or revoke access. According to Ethereum.org, a leading authoritative source on blockchain development, Web3 empowers users to "own" digital assets like NFTs (non-fungible tokens), which can represent anything from art to music files, allowing seamless portability across applications. In essence, your digital profile or assets aren't locked into one company's ecosystem; they reside on the blockchain, giving you full control and the ability to move them freely.

• Key Differences in Ownership: In Web2, data is "rented"—platforms grant access but retain ultimate control, often using it for targeted advertising or algorithmic feeds. Web3 flips this to self-sovereignty, where users hold private keys (secure codes) to manage their data, reducing reliance on intermediaries.
• Real-World Example: Ethereum.org highlights how an NFT of a music MP3 can be owned across all Ethereum-based apps, not confined to a single service like Spotify. This portability means if one app shuts down, your asset remains intact and usable elsewhere.
• Updates and Trends: As of September 2025, the global digital identity market, fuelled by Web3, is projected to reach $83.2 billion, driven by privacy concerns and regulations like the EU's eIDAS 2.0, according to Gartner reports. The World Economic Forum notes that decentralized identities could empower over 1 billion people in underserved regions by providing verifiable credentials without traditional infrastructure. This shift addresses Web2's data breaches, which affected 1.1 billion accounts in 2024 alone, per cybersecurity firm Surfshark.
• Starting with Web3 means learning to use wallets like MetaMask, which act as your gateway to ownership, but it requires understanding basic security to avoid common pitfalls like phishing.

Practical Aspects of Web3 Identity

In practice, Web3 identity transforms how users authenticate and interact online, moving away from traditional usernames, passwords, and email-based logins that are vulnerable to hacks and central control. Instead, it relies on cryptographic tools like crypto wallets (software or hardware devices that store your private keys) and blockchain-based identifiers. Your wallet address—a unique string of characters on the blockchain—serves as a universal passport, allowing "connect wallet" logins on decentralized applications (dApps). This system ensures data is public yet verifiable without exposing sensitive personal information, thanks to zero-knowledge proofs (advanced math that proves something is true without revealing details). Cointelegraph, a trusted blockchain news source, defines Web3 digital identity as "a unique online identity that the individual user fully controls," built on decentralized identity (DID) systems like those standardized by the W3C (World Wide Web Consortium). This approach not only enhances privacy but also enables "verifiable credentials," where you can prove attributes (e.g. age or qualifications) without sharing full documents.

• How Logins Work: On dApps like Uniswap or OpenSea, clicking "connect wallet" links your address instantly, eliminating forgotten passwords. Blockchain transparency allows verification—e.g. proving you hold an NFT or participated in a DAO vote—while keeping your real name hidden.
• Core Components: Private keys are your "password" to the blockchain; lose them, and you lose access (no reset option). DIDs, as per the Decentralized Identity Foundation (DIF), are self-sovereign, meaning no central authority issues or revokes them.
• Developments: By mid-2025, over 1.2 billion people use some form of digital ID globally, with Web3 variants like mobile driver's licenses gaining traction in the EU and US, according to Trinsic's September 2025 report. J.P. Morgan's Kinexys platform emphasizes seamless, trusted sharing of identity data in Web3, predicting widespread adoption in finance by 2026. Dock Labs' 2025 guide notes integration with AI for fraud detection, reducing identity theft by up to 40% in pilot programs.
• Tips for Beginners: Start with a non-custodial wallet (you control keys) and enable two-factor authentication. Practice on testnets (fake blockchains) to avoid real losses.

Key Examples of Decentralized Identity

Decentralized identity projects in Web3 provide concrete ways for users to build and manage their online personas without relying on centralized gatekeepers. These tools use blockchain to ensure ownership, portability, and security, allowing identities to function across multiple platforms. Think of them as upgraded versions of email addresses or social handles, but with built-in ownership and privacy features. We'll focus on two prominent examples: Ethereum Name Service (ENS) and Lens Protocol, both of which have seen significant growth in 2025, reflecting broader trends toward user-centric digital ecosystems.

• Ethereum Name Service (ENS): ENS acts as a blockchain-based domain name system, similar to traditional DNS but decentralized. Users register human-readable names like "ollie.eth" as NFTs, which they own outright—no central authority like GoDaddy can seize or censor them. These names link to wallet addresses, websites, avatars, or even social profiles, creating a portable identity hub. Ethereum.org, the official Ethereum foundation site, uses "ethereum.eth" as its controlled domain, demonstrating real-world utility. ENS resolves the hassle of long, cryptic wallet addresses, making transactions and logins intuitive.
• Updates for ENS: As of September 2025, ENS has over 2 million total registrations, with approximately 1.3 million active names and 638,000 unique owners, according to the official ENS dashboard and CoinMarketCap analyses. Integrations have grown to over 600 apps, including wallets like MetaMask and dApps like Uniswap. Recent features include multi-chain support (e.g. Layer 2 networks like Optimism) for cheaper registrations and enhanced privacy via zero-knowledge proofs. Revenue reports from Q1 2025 show $4.9 million from registrations, highlighting its sustainability.
• Decentralized Social Profiles (Lens Protocol): Developed by the Aave team, Lens Protocol is a blockchain framework for social media where users mint ".lens" handles as NFTs, owning their profiles, posts, followers, and content. This creates a unified, on-chain social identity that's not tied to any single app—your "social graph" (connections) travels with you. DappRadar describes Lens's goal as providing "a single, blockchain-secured identity across all digital platforms," enabling features like tokenized posts or monetized interactions. It's built on zkSync for fast, low-cost operations, making it accessible for everyday use.
• Updates for Lens Protocol: By April 2025, Lens migrated to its own Layer 3 chain (Lens Chain), with over 650,000 profiles minted, 640,000 handles, 45,000 weekly active users, and 28 million social connections. Recent developments include SNS Notifications (August 2025) for real-time alerts and the Lens Token Distributor (August 2025) for fair, gasless token airdrops. A $15 million funding round in early 2025 supported expansions like Grove (a modular toolkit) and Social Primitives for customizable social features.
• Tips for Beginners: Experiment with ENS by registering a cheap .eth name (costs ~$5/year plus gas). For Lens, mint a handle via their app and connect to social dApps like Orb or Phaver to see portability in action.

Web3’s Vision: A User-Controlled Internet

The overarching vision of Web3 is to create an internet where users, not corporations, hold the reins—owning assets, identities, and data in a seamless, interoperable ecosystem. This "user-controlled" model replaces Web2's rented silos with blockchain-native tools, ensuring data and relationships are portable and resilient. Projects like ENS and Lens are foundational steps, illustrating how decentralized identities can dismantle barriers and foster innovation. As Cointelegraph and other sources emphasize, this shift promotes privacy, reduces censorship, and enables new economic models like SocialFi (social + finance). In 2025, with global Web3 adoption reaching 1 billion users (per Gartner forecasts), this vision is becoming reality, though challenges like scalability persist.

• Core Principles: You "own your assets" (e.g. NFTs as portable items) and identity, rather than renting from platforms. This means data moves with you—switch apps without losing progress.
• Broader Impacts: Empowers creators (monetize directly via tokens), enhances privacy (selective sharing), and fights centralization (no single point of failure).
• 2025 Trends: J.P. Morgan's Kinexys reports predict Web3 identities will enable trusted, seamless data sharing in finance and beyond. Trinsic's landscape shows reusable IDs and mobile credentials accelerating adoption, with governments like the EU piloting blockchain IDs. Challenges include interoperability standards, as noted in Dock Labs' 2025 guide.
• Advice for Beginners: Web3 replaces siloed logins with blockchain IDs you control. Start exploring to build your decentralized presence, but always secure your keys.

Conclusion

Web3 and digital identity together hold the promise of shifting power away from centralized platforms toward individual users: giving people control, privacy, portability, and ownership of their digital selves. We see this already in systems like ENS, Lens Protocol, decentralized identity (DID) methods, and newer wallet/authenticator innovations.

But realizing that promise isn’t automatic. It requires solving technical problems (scalability, security), regulatory alignment, better user tools, and ensuring privacy and trust. As students, developers, users, or policy‑makers, the path forward is to learn the building blocks, understand trade‑offs, and participate in shaping standards and systems.