The Decentralisation Paradox in Digital Identity: Centralising Decentralisation with Digital Wallets?

TL;DR

This paper examines the decentralisation paradox in digital identity, revealing that user-centric approaches often redistribute centralisation rather than eliminate it, highlighting the need for holistic design considering technical, legal, social, and ethical factors.

Contribution

It introduces a critical systems thinking framework to analyze the complex interdependencies in digital identity architectures, emphasizing the importance of addressing all dimensions for effective decentralisation.

Findings

User-centric digital identity often redistributes centralisation.

Understanding interdependencies is crucial for reliable architecture design.

Holistic approaches are needed to truly achieve decentralisation.

Abstract

Digital identity is shifting from service- and network-centric approaches toward user-centric ones that promise users increased control over their data. Despite their decentralised design, such approaches often reintroduce centralised components in different forms. This research explores this tension, i.e., the decentralisation paradox, and argues that user-centric architectures tend to redistribute rather than eliminate centralisation. Based on Critical Systems Thinking (CST), digital identity is framed as a "wicked problem" that spans across the technical, legal, social and ethical dimensions. The paper argues that understanding all these interdependencies is essential for designing reliable architectures and ensuring the next generation of digital identity goes beyond superficial decentralisation.