The internet was built to connect machines, not people. Its basic architecture maps servers to domain names and uses cryptographic certificates to prove websites are authentic. Yet it lacks a built-in way to bridge the gap between our offline identities \u2014\u00a0citizen, taxpayer, patient, employee, student \u2014 and the digital systems on which we increasingly rely to conduct our economic, civic, and personal lives.\u00a0\u00a0\u00a0<\/p>\n
Thanks to the internet\u2019s missing identity layer, online life has become a painful, repetitive hassle of lost passwords, security code texts, and cumbersome, invasive sign-ups. We cobble together credit records, blurry photos of driver\u2019s licenses, awkward selfies, and security questions about our childhood pets. The experience is just awful, but it also doesn\u2019t work \u2014 and it\u2019s costing us.\u00a0<\/p>\n
Americans lost $47 billion to identity fraud and scams in 2024 alone. Organized criminal networks siphoned off billions in pandemic relief. Fraud in public benefits, student aid, and small business lending has become endemic. At the same time, generative AI threatens to make all these problems much worse. The physical documents we upload to prove things about ourselves are now trivial to fake, while the astonishing quality of deepfake audio and video means that our own faces and voices can no longer reliably prove that it\u2019s really us on the other end of a phone line or Zoom<\/a> call.<\/p>\n That\u2019s why digital identity needs to be treated as critical infrastructure, like the financial system, the electrical grid, and the internet itself. Lawmakers, regulators, and industry leaders have talked about digital identity as a matter of critical infrastructure for years, but the need has never been clearer or more urgent. It\u2019s time to act and create a federal digital identity framework\u2014not to centralize identity (Americans neither want nor need a national ID), but to standardize and govern the federated architecture of online trust.\u00a0<\/p>\n Without it, we\u2019ll keep layering brittle workarounds on top of an internet that was never built to handle identity and risk the security and performance of all the critical infrastructure into which the internet is increasingly tightly woven.<\/p>\n We know what to do<\/p>\n The good news is that we know what to do. Digital identity technology, built on the same encryption methods we use to verify the authenticity of your bank\u2019s website, can go a long way toward closing the chasm between online and offline identity. Cryptographically secured digital identity has long seemed like a merely theoretical solution, but that\u2019s rapidly changing. We\u2019ve very recently reached a technical tipping point. We no longer have a tooling problem.\u00a0<\/p>\n Today, at least 20 U.S. states have moved to launch mobile driver\u2019s licenses and state IDs (mDLs) that can be held in a digital wallet, offering a glimpse of how digital credentials can work in practice. Unlike physical driver\u2019s licenses, mDLs, which are cryptographically signed by the issuing state, can\u2019t be faked. They support \u201cselective disclosure,\u201d which makes it possible to share only the information needed for a specific transaction, like proving you\u2019re old enough to buy beer without also revealing your weight and home address. It\u2019s a rare technology that enhances security and privacy at the same time.\u00a0<\/p>\n That said, mDLs aren\u2019t currently very useful because they\u2019ve been limited to in-person use cases. You can use them to prove your identity at some airport security lines or tap a point-of-sale system at a handful of venues to prove that you\u2019re old enough to buy an adult beverage. That\u2019s cool and holding an mDL on your phone will swiftly become more practical and convenient as readers get integrated into more systems.<\/p>\n However, to be really useful, digital credentials need to be sharable online. Right now, if you want to open a bank account, start driving for DoorDash<\/a>, or sell macrame owls on Etsy<\/a>, you\u2019re required to upload a photo of your driver\u2019s license. This is a clumsy, invasive process prone to all sorts of fraud. But over the past few months, new technical standards for sharing and verifying mDLs online, and for requesting and receiving credentials through browsers and mobile operating systems, have finally rolled out. So, instead of launching yet another picture of your entire driver\u2019s license into the ether, you\u2019ll soon be able to securely share an mDL \u2014 or just the information required for the specific transaction \u2014 straight from your phone or browser wallet.<\/p>\n The future of digital credentials doesn\u2019t begin and end with driver\u2019s licenses. The same basic technology will make it possible to issue and share digital birth certificates, marriage licenses, student IDs, occupational licenses, diplomas \u2014 you name it. If it can be issued on paper or plastic, it can be issued as a secure, cryptographically signed digital credential.\u00a0<\/p>\n We have the technology, but it won\u2019t automatically add up to the kind of digital identity infrastructure we need \u2014 or want. Successfully fixing the problem will require broad coordination between the government agencies that issue our identity credentials, the organizations that set technical standards, the software companies and device manufacturers that build secure digital wallets, and citizens rightly jealous of their privacy and sensitive personal information who don\u2019t feel pressured to share their mobile driver\u2019s license every time they order a pizza.\u00a0<\/p>\n We could easily get stuck with a patchwork<\/p>\n Without federal leadership, we\u2019re likely to get stuck with what we already have: a patchwork of DMV-led identity programs, closed-system vendor contracts, and siloed solutions that don\u2019t scale or interoperate. To get this right, we need a federal digital identity strategy that establishes the rules, standards, and safeguards for how identity works in the 21st century.<\/p>\n That strategy should do four things:<\/p>\n Establish shared technical and policy standards for how digital identity credentials are issued, verified, and used. That includes privacy-by-design, selective disclosure, cryptographic integrity, and high-assurance verification.<\/p>\n Ensure interoperability across states, agencies, platforms, and sectors. Whether someone\u2019s credential is issued by a state, a federal agency, or a private entity, it should work wherever identity is needed\u2014just like passports, but for digital life.<\/p>\n Build public trust. That means legal guardrails, transparency, and oversight. Identity infrastructure should be open, auditable, and protected from abuse by both state and corporate actors. There need to be clear rules limiting when sensitive digital credentials can be requested, and regulating how our personal information is collected, stored, and shared. The issuers of digital credentials should not know when or where you\u2019ve presented them. If digital IDs can be used to track us, we won\u2019t use them.<\/p>\n Promote inclusion and resilience. Not everyone has a smartphone. Not everyone drives. Not everyone wants to use the same platform. A national framework should support public options\u2014such as offering identity verification and digital credential issuance at local post offices\u2014and mandate device and platform neutrality.<\/p>\n The government has taken some small steps in the right direction. The text of the GENIUS Act, which creates a legal structure around stablecoins, directs the Department of the Treasury<\/a> to explore digital identity technology as a tool for combating illicit finance. Likewise, a recent report<\/a> from the White House Working Group on Digital Asset Markets notes that digital identity is critical for securing cryptocurrency networks against fraud and financial crime in a privacy-preserving way.<\/p>\n That\u2019s great, but in an increasingly online world, problems of identity and trust pervade nearly every service and system, not just crypto networks. Infrastructure-level problems demand infrastructure-level solutions. That begins with a federal framework for digital identity.\u00a0\u00a0<\/p>\n Again, this isn\u2019t about issuing a national ID card. Nor is it about replacing paper and plastic credentials with digital ones. There should always be physical credentials and the option to use them. It\u2019s about creating a public trust layer \u2014 an identity architecture that enables secure, privacy-preserving, human-centered participation in the digital systems that have come to shape our lives.<\/p>\n This won\u2019t work without trust<\/p>\n None of this will work if people don\u2019t trust it. There\u2019s a reason many Americans get nervous when they hear \u201cdigital ID.\u201d And they\u2019re not wrong. Identity systems \u2014 especially ones controlled by centralized authorities or tied to proprietary platforms \u2014 can become powerful tools of surveillance. Without safeguards, they risk enabling the very abuse they\u2019re meant to prevent.<\/p>\n That\u2019s why privacy isn\u2019t an optional feature. It\u2019s the cornerstone of any legitimate identity infrastructure.<\/p>\n A well-designed digital identity system doesn\u2019t just verify that you are who you say you are. It also protects your ability to limit what you reveal \u2014 to disclose that you\u2019re over 18 without handing over your birthday, to prove eligibility for benefits without exposing your entire financial history. We have the tools for this. The question is whether we\u2019ll use them.<\/p>\n A digital identity system without democratic governance or legal guardrails doesn\u2019t enhance freedom \u2014 it conditions it. It turns participation into permission. And when identity becomes a proprietary product, the terms of recognition shift from public legitimacy to private control.<\/p>\n We built the internet without an identity layer. We can fix that. But it will take public coordination, political will, and a commitment to openness, privacy, and the common good.<\/p>\n So let\u2019s get started. Let\u2019s get it right.<\/p>\n The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of\u00a0Fortune.<\/p>\n","protected":false},"excerpt":{"rendered":"The internet was built to connect machines, not people. 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