Imagine if your driver's license, birth certificate, and passport lived on your phone as tamper-proof digital documents, all under your control at a single digital address. When a bank needs to verify your age, you don't hand over a photocopy of your ID. You send a mathematical proof that says "yes, this person is over 18" without revealing your birthdate, address, or anything else. It's stored on the blockchain. Nobody can change it or rewrite it.

Now imagine an entire country doing this. That's what Bhutan did. Feelings were mixed.

Bhutan moved their national identity system on the blockchain, specifically migrating from Polygon (a faster, cheaper network often used for testing) to Ethereum (the most battle-tested public blockchain). A public network that no government, company, or hacker can secretly CHANGE.

Citizens hold their own credentials. Verification happens against a record that any individual can audit, but no one controls; pure sovereignty. Ethereum is not run by the government of Bhutan, a vendor, or a private consortium. It’s a public network maintained by thousands of independent operators worldwide. No government, company, or hacker can unilaterally alter identity records without that change being visible to the public.

It's ONE of the first times any nation has done this at scale. It's been tried previously and has failed. It raises a question that matters beyond blockchain, and the question I’m asking you...Can technology that was built for financial speculation actually make government work better for regular people?

It was (mostly) celebrated that Bhutan put IDs on Ethereum. But can 800,000 people recover their credentials when they lose their phones? Can a farmer in a small village prove she owns land without a bank seeing her medical history? Will the X% of rural citizens who aren't online yet get included or left behind? And will sovereignty reign if corporations own blockchain?

Who is watching the watchers? I’m stuck on whether this is an effective step forward or not. Each bit of research has me doubting.

​

We’ve believed the blockchain works for years. The question is whether it works for people who don’t have the option to decide when and where to use it.

I’ve been wanting to build for everyone that isn’t ‘us’ since I got into web3 - those that are unbanked or exploited. Is enabling this the right move?

Should we rally a call to build for others, or will Web3 remain a fragmented casino?

​

GovTech Secretary Jigme Tenzing on why they chose Ethereum over Polygon:

"By moving to Ethereum, we are further strengthening the security of our digital identity. Ethereum is one of the most decentralized blockchains in the world, making it virtually impervious to disruption."

Bhutan decided against vendor lock-in; it chose a system that's not dependent on any single company's technology. If the vendor who built their identity system disappeared tomorrow, the underlying infrastructure would still work because it runs on open, public standards that anyone can build on... no single point of failure. No government or company can quietly alter records. No single point of failure, AND no government or company that can quietly alter records.

This week, Bhutan further anchored its identity on Ethereum and announced TER (a sovereign gold-backed token launching on Solana on December 17). Bitcoin mining since 2019, digital ID on Ethereum, tokenized gold on Solana. Bhutan is building full-stack digital sovereignty.

​

Many people believe that digital identity (blockchain or not) is inherently dangerous: biometric data collected, every transaction tracked, social credit scores, programmable money that can be turned off. Given what I just described (a system that could track everything you do), they're not wrong to worry.​

However, the architecture can determine the outcome. Centralized databases make mass surveillance easy; systems that put users in control of their credentials and reveal only what’s strictly necessary change the power dynamics entirely.

The question isn't whether digital ID can become a tool of control. It obviously can. The question is whether there's a version that doesn’t, and whether Bhutan's approach gets us closer to that or further away. Bhutan’s approach pushes in that direction by minimizing centralized control, limiting data disclosure by default, and making changes publicly auditable. That doesn’t guarantee safety, but it could materially raise the cost of misuse. Isn’t that what we’re looking for?

Meanwhile, in the UK, 2.97 million people have just signed a petition opposing mandatory digital ID, the fourth-largest petition in British parliamentary history. Parliament debated it on December 8. The EFF called it "structurally incompatible with a rights-respecting democracy." The government's response? Going ahead anyway. Mandatory for right-to-work checks by 2029.

In most countries, your ID lives in a government database you can't see. If someone alters your records (accidentally or not), you might not know until you’re denied a loan or a passport.

Bhutan's system puts the credential in the hands of the people (right…RIGHT?). The government issues it, but you hold it.

When you need to prove something (your age, your address, your citizenship), you share a cryptographic proof, not a photocopy of your documents. Verification occurs against a public ledger that no one, including the government, can secretly edit.

It's the difference between keeping your savings in a bank that might freeze your account versus holding cash in a safe you control. Except the "safe" is based on math, and anyone can verify it's real without seeing what's inside. But what happens when the people with that control (the users) don’t have the understanding of how to access?

This choice was a three-year journey through different tech stacks, and the choices they made tell you a lot about their priorities.

The path: Hyperledger Indy → Polygon → Ethereum mainnet

What this means: Bhutan tested with private tech, launched nationally on a cheaper network, then moved everything to Ethereum - the most expensive but most secure option.

Most projects go the other direction to save money. Bhutan paid more because for a national ID system, "nobody can tamper with this" matters more than "this is cheap to run."

​

​

• Decentralized Identifier (DID): Each citizen receives a unique cryptographic identifier recorded on-chain (a verifiable username no one controls).

• Verifiable Credentials (VCs): Institutions issue digitally signed documents stored in the citizen's wallet (off-chain). These include citizenship certificates, driver's licenses, health records, and educational credentials.

• Cryptographic Proofs: When verification is needed, the citizen generates a proof pulled from their verifiable credential. The verifier checks the evidence against the issuer's decentralized identifier on Ethereum without learning anything else.

• In plain English: Instead of handing over your entire ID card so someone can check your age, you hand over a sealed envelope that says "yes, this person is over 18” and the math proves you're not lying. The verifier never sees your birthdate, your address, or your photo. They just get a yes or no.

This separation (credentials off-chain, trust anchors on-chain) is the hinge of privacy. Personal data stays in the user's possession, while anyone can verify authenticity.

​

​

According to Biometric Update and iDen2's partnership announcement. The following metrics come from Biometric Update (a trade publication covering identity technology) and from a partnership announcement by iDen2, a digital identity company that later partnered with Bhutan to export its system globally. These are the numbers Bhutan is publicly claiming—worth noting they come partly from sources with a stake in the project's success:

• 78% of Bhutan's rural population now accesses government services digitally

• 70% reduction in per-transaction service delivery costs

• 45% increase in financial service access

• 90,000+ foundational identity documents issued

• 14 G2C (government-to-citizen) services integrated

• 10+ integrations with government and private sector services

NB: Bhutan is 70% rural, mainly mountainous villages, where getting to a government office might mean a full day's travel. If a farmer can prove land ownership or access a subsidy without leaving her village, that's the difference between participating in the formal economy or not.

​

The 45% increase in financial access matters because you can't get a bank account without an ID. You can't get credit. You can't receive government payments directly. For the previously unbanked, this is the on-ramp to everything else.

​

The 70% cost reduction shows this might actually stick. Governments don't maintain systems that cost more. They keep systems that save money.

​

Here's where I get a little skeptical. Because the crypto world has been claiming "blockchain will revolutionize identity" for about a decade now, and mostly it hasn't.

​

• Estonia has been running an excellent digital government since the early 2000s.

• 1.3 million people.

  • PKI (Public Key Infrastructure)- Based smart cards.

  • Digital signatures for everything.

…It works beautifully.

And Estonia's system isn't on a public blockchain.

So what does blockchain actually add that Estonia doesn't already have?

​

​

​

​

• Bhutan's bet makes sense for their specific priorities:

• A small nation wanting maximum resilience against external pressure

• Transparent accountability for citizens

• Positioning for globally portable digital identity.

The "globally portable identity" part is the long game. Right now, a Bhutanese credential only matters in Bhutan. But if the EU's digital wallet rollout normalizes the same standards (W3C, eIDAS), suddenly Bhutan's citizens have credentials that work across borders.

For a small country whose economy depends on tourism and whose citizens often work abroad, that portability isn't abstract—it's economic infrastructure.

​

The tech is fine. The tech has been fine for years. Here's what will actually make or break this:

Privacy That Regular People Can Use

On paper, the architecture looks great… data off-chain, cryptographic proofs, zero-knowledge selective disclosure.

In practice? We’ve watched too many "privacy-preserving" systems fail because the UX is impossible for anyone who isn't a high-level engineer.

​

Kirill Avery (CEO of Alien, a decentralized identity network) put it bluntly:

"Putting national IDs directly on a public chain like Ethereum could be a double-edged sword. Transparency is good for auditability, but not for privacy. Once credentials live on-chain, they live forever, and that permanence can quickly turn into surveillance if not handled with extreme care."

​

Technologies already proven in production:

• Rarimo ZK Passport: Uses biometric passport NFC scans to create local ZK proofs of nationality/age. Users verify citizenship "incognito" without revealing any other information. Proofs generated entirely on-device.

• Privado ID (formerly Polygon ID): Built on Iden3 protocol and Circom toolkit. "Private-by-default" credential checks. Users verify credentials without ever revealing personal information through zkSNARK circuits.

• zkSync / QuarkID (Buenos Aires): Already serves 3.6 million residents with municipal credentials verified by zero-knowledge proofs.

• Pairwise DIDs: Unique identifiers for each relationship (one DID for banking, another for healthcare) to prevent cross-context correlation.

• ZK-proof selective disclosure: Prove "I am over 18" without revealing birthdate.

• Public privacy audits: Commission independent cryptographers to review what data patterns are visible on-chain.

You hold your own keys. You lose your phone, forget your password, or your house floods. Now what?

In a truly self-sovereign system, nobody can help you—that's the point. But that also means you can permanently lose access to your identity. For 800,000 people, including elderly farmers in remote villages, that's not empowerment. That's a disaster waiting to happen.

Bhutan's Recovery Mechanism

According to DHI leadership, Bhutan implemented a recovery process where "only the individual has the right to recover [their data]… not the government or any other entity."

The likely flow:

1. Citizen loses phone

2. Visits government office with physical ID

3. Official verifies identity through existing records and biometric matching

4. Once verified, new credentials issued to new device

5. Blockchain shows: old DID marked as recovered, new DID issued

Target Metrics:

• 95% of users recovered within 72 hours

• Zero PII viewed by staff during recovery

• Recovery shouldn't require technical expertise

78% of rural Bhutan already accesses digital services.

But I care more about the other 22%. Who are they? Probably the poorest, the oldest, the least connected. The people who most need government services and are least able to navigate digital systems.

If this project only works for people who already have smartphones and digital literacy, it's not inclusion—it's another system that serves people who were already being served.

​

​

The goal is to ensure that digital identity expands access rather than creating new barriers.

• 6,150+ BTC ($562 million)

• 656 ETH (~$2.73 million)

• 320 ETH staked via Figment (November 2025)

Bhutan holds over half a billion dollars in Bitcoin and stake in Ethereum. When a government puts that much of its own money into crypto infrastructure. They're betting their treasury that this technology will be around long-term. That's a different kind of commitment than a press release.

Governance Needs:

• Independent privacy commission with audit authority

• Citizen appeals process for credential correction

• Quarterly ledger audits published openly

• Time-locked contract upgrades, multi-sig approved

• Annual "function-creep" review by civil society

I've been in crypto long enough to remember a lot of "this will change everything" projects that didn't. Before we get too excited about Bhutan, let's remember why previous attempts failed.

​

"Blockchain voting" that failed independent security audits. The blockchain didn't make it secure—poor implementation made it vulnerable.

Lesson: Saying "blockchain" doesn't magically make something safe.

​

A "voluntary blockchain nation" that recorded marriages and births on Ethereum. Collapsed under governance chaos because you actually need institutions for identity to mean anything.

Lesson: Pure decentralization without legal recognition or support structures doesn't work.

Rapid enrollments, widespread bans. Turns out, when you collect iris scans from millions of people, regulators get nervous.

Lesson: Just because you can collect data doesn't mean you should.

Bhutan combined the tech with actual institutional backing. Royal endorsement. Parliamentary oversight. Government agencies are integrated. Support channels when things go wrong.

​

Ready Now:

• Small, high-trust states: Estonia, Singapore, Rwanda, Uruguay

• African leapfrogs: Kenya, Rwanda, Ghana (already mobile-first with M-Pesa)

• Cities testing before nations: Buenos Aires, Dubai, Montevideo

EU Interoperability Opportunity:

• EUDI Wallet rollout by 2026 normalizes verifiable credentials for 400 million people

• Bhutan's W3C/eIDAS compliance positions it to plug into that ecosystem

​

In August 2025, Bhutan NDI partnered with iDen2 to launch Phenix—an end-to-end identity solution aimed at other governments and enterprises.  Phenix is:

• Modular architecture

• Standards compliant (ISO/IEC 24760, GDPR, eIDAS, W3C)

• Built on Bhutan's real-world deployment experience

"The launch of Phenix represents our commitment to democratizing digital identity deployment globally. Having successfully navigated the complexities of national digital identity deployment in Bhutan, we understand what governments need." — Jacques Von Benecke, CEO of Bhutan NDI.

​

The crypto world celebrates or condemns this for various reasons. Fine.

But I care about whether it actually helps people. A large number of people worldwide lack formal identification. Without it, you can't open a bank account, prove your qualifications, or vote. You're excluded from the formal economy through no fault of your own.

Traditional approaches either create surveillance states or leave everyone managing fifteen different passwords for fifteen different institutions.

Bhutan is trying a third way: decentralized infrastructure that's user-controlled but government-enabled. If it works, it matters a lot more than just one small kingdom.

If it doesn't, at least we'll learn something. FIDO just launched a digital credentials initiative and THAT is something to pay attention to.

• Is "self-sovereign" actually meaningful if the government still controls issuance and recovery?

• What would it take for this to work in a country where people don't trust their government?

• Am I being too optimistic or too skeptical here?

The right next move is to focus on the necessary institutional and UX infrastructure: zero-knowledge tooling, privacy-preserving recovery, and analog off-ramps. If the Web3 ecosystem fails to provide these tools, then yes, it risks remaining a casino—because the real-world application will fail on the human front, regardless of the brilliance of the code.

Aya Miyaguchi (Ethereum Foundation President):

"Today, Bhutan celebrates a historic milestone, becoming the first nation to anchor its national digital identity system on Ethereum... It's deeply inspiring to see a nation commit to empowering its citizens with self-sovereign identity."

Jigme Tenzing (GovTech Secretary):

"By moving to Ethereum, we are further strengthening the security of our digital identity. Ethereum is one of the most decentralized blockchains in the world, making it virtually impervious to disruption."

Vitalik Buterin (Ethereum Co-founder):

"Decentralized digital identity empowers people by giving them more secure control over their data and their online lives. Bhutan's embrace of an open architecture on Ethereum reflects why we build this platform: to drive meaningful, positive change through open-source technology."

Ujjwal Deep Dahal (DHI CEO):

"NDI is the foundational layer of the digital economy... on this layer, we can build numerous applications."

Jacques Von Benecke (Bhutan NDI CEO):

"Our Digital Signature Platform is more than just an upgrade to electronic signing—it's a leap forward in digital trust. By combining decentralized identity, cryptographic verification, and a human-friendly signing experience, we've built a system that ensures every document signed carries the same weight of authenticity years into the future as it does today."

Kirill Avery (Alien CEO, Privacy Expert):

"Putting national IDs directly on a public chain like Ethereum could be a double-edged sword. Transparency is good for auditability, but not for privacy. Once credentials live on-chain, they live forever, and that permanence can quickly turn into surveillance if not handled with extreme care."

PM Lyonchhen Tshering Tobgay:

"We're connecting Bhutan to the global ecosystem with an interoperable, user-owned identity system that is secure, transparent, and inclusive."

​

Official Announcements & Government Sources

• Bhutan Broadcasting Service (BBS) — "HRH Gyalsey graces event announcing NDI-Ethereum integration" (Oct 14, 2025)

• https://www.bbs.bt/news/?p=201233

• Aya Miyaguchi (@AyaMiyagotchi) — Launch announcement on X (Oct 13, 2025)

  

  Aya Miyaguchi

  @AyaMiyagotchi

  1/ Today, Bhutan celebrates a historic milestone, becoming the first nation to anchor its national digital identity system on Ethereum.
  @VitalikButerin and I were honored to join the launch ceremony on behalf of the Ethereum community, graced by His Royal Highness.

  

  2,792

  6:09 PM • Oct 13, 2025

Primary News Coverage

• Decrypt — "Bhutan to Anchor National Digital ID on Ethereum by Early 2026" (Oct 14, 2025) — Vince Dioquino

• https://decrypt.co/204233/bhutan-anchor-digital-id-ethereum

• Cointelegraph — "Bhutan migrates its national ID system to Ethereum" (Oct 13, 2025) — Brayden Lindrea

• https://cointelegraph.com/news/bhutan-migrates-id-system-ethereum

• The Block — "Bhutan to anchor its national digital identity system on Ethereum" (Oct 14, 2025)

• https://www.theblock.co/post/374480/bhutan-migrates-national-digital-id-system-ethereum

• Unchained — "Bhutan Migrates National Digital Identity to Ethereum" (Oct 14, 2025)

• https://unchainedcrypto.com/bhutan-migrates-national-digital-identity-to-ethereum/

• Biometric Update — "Bhutan begins migrating self-sovereign digital ID to Ethereum" (Oct 14-15, 2025) — Chris Burt

• https://www.biometricupdate.com/202510/bhutan-begins-migrating-self-sovereign-digital-id-to-ethereum

• Biometric Update — "Bhutan NDI partners with iDen2 to export benefits" (Aug 26, 2025) — Lu-Hai Liang

ZK/Privacy Technology Documentation

• Rarimo Docs — ZK Passport

• https://docs.rarimo.com/zk-passport/

• Rarimo Medium — "Proof of Citizenship: Passport ZKPs and Incognito Identity" (Jan 16, 2025)

• https://rarimo.medium.com/proof-of-citizenship-passport-zkps-and-incognito-identity-2025

• Polygon Blog — "Introducing Polygon ID: Zero-Knowledge Identity for Web3" (Mar 2022)

• https://blog.polygon.technology/introducing-polygon-id-zero-knowledge-identity-for-web3

• Privado ID Docs — On-chain verification

• https://docs.privado.id/docs/verifier/on-chain-verification/overview/

• Spruce ID Blog — "Sign-in with Ethereum for Governments" (Apr 2024)

• https://blog.spruceid.com/sign-in-with-ethereum-for-governments

• Gitcoin Docs — Passport v2 Whitepaper

• https://docs.gitcoin.co/passport-v2-whitepaper

• Cointelegraph — "Buenos Aires rolls out blockchain-based ID for 3.6M residents" (Oct 22, 2024) — Ana Paula Pereira

Comparative Systems & Policy

• European Commission — EUDI Wallet Overview (2025)

• https://digital-strategy.ec.europa.eu/en/policies/eudi-wallet

• World Bank — ID4D Principles

• https://id4d.worldbank.org/

• India UIDAI — Aadhaar Official

• https://uidai.gov.in/

• TechPolicy.press — "Lessons from National Digital ID Systems" (Jun 25, 2025) — CJ Larkin & Renée DiResta

• https://techpolicy.press/lessons-from-national-digital-id-systems

Failed Projects / Cautionary Tales

• MIT Internet Policy — Voatz Security Analysis (2020)

• https://internetpolicy.mit.edu/voatz-analysis

• Wikipedia — Bitnation

• https://en.wikipedia.org/wiki/Bitnation

• Reuters — "Privacy Regulators Probe Worldcoin" (Aug 2024)

• https://www.reuters.com/technology/worldcoin-privacy-investigations-2024-08-01

Financial Inclusion Context

• Stanford Social Innovation Review — "Working Toward Financial Inclusion With Blockchain" — Cecilia Chapiro

• https://ssir.org/articles/entry/working_toward_financial_inclusion_with_blockchain

• Frontiers in Blockchain — "Blockchain technology for digital financial inclusion" (Jan 27, 2023)

• https://www.frontiersin.org/journals/blockchain/articles/10.3389/fbloc.2023.1035405/full

• CSIS — "Unlocking Financial Inclusion" (May 1, 2025)

• https://www.csis.org/analysis/unlocking-financial-inclusion

Standards & Technical References

• W3C — DID Core Specification

• https://www.w3.org/TR/did-core/

• W3C — Verifiable Credentials Data Model

• https://www.w3.org/TR/vc-data-model-2.0/

• Wikipedia — Self-sovereign identity

• https://en.wikipedia.org/wiki/Self-sovereign_identity

• Wikipedia — Zero-knowledge proof

• https://en.wikipedia.org/wiki/Zero-knowledge_proof

Bhutan Crypto Holdings Context

• CoinDesk — "Bhutan Has Been Secretly Mining Bitcoin Since 2020" (May 2023)

• https://www.coindesk.com/business/2023/05/01/bhutan-secret-bitcoin-mining-2020

• Bloomberg — "Bhutan's $1.3 Billion Bitcoin Treasury and Crypto Strategy" (May 2023)

• https://www.bloomberg.com/news/articles/2023-05-01/bhutan-bitcoin-treasury-and-crypto-strategy

• https://opengovdata.io/

• https://ssir.org/articles/entry/working_toward_financial_inclusion_with_blockchain

• https://fintechmagazine.com/articles/crypto-regulations-and-building-financial-inclusion

• https://en.wikipedia.org/wiki/Bitnation

• https://www.ccn.com/news/crypto/indian-city-amravati-government-records-on-the-blockchain/

• https://platform.keesingtechnologies.com/brazils-bold-new-blockchain-based-digital-id/

Newest Additions:

• https://decrypt.co/351928/bhutan-launches-sovereign-gold-backed-token-solana

• https://petition.parliament.uk/petitions/730194

• https://petition.parliament.uk/petitions/730194

• https://ec.europa.eu/digital-building-blocks/sites/spaces/EUDIGITALIDENTITYWALLET/pages/924975727/EUDI+Wallets+Launchpad

Imagine if your driver's license, birth certificate, and passport lived on your phone as tamper-proof digital documents, all under your control at a single digital address. When a bank needs to verify your age, you don't hand over a photocopy of your ID. You send a mathematical proof that says "yes, this person is over 18" without revealing your birthdate, address, or anything else. It's stored on the blockchain. Nobody can change it or rewrite it.

Now imagine an entire country doing this. That's what Bhutan did. Feelings were mixed.

Bhutan moved their national identity system on the blockchain, specifically migrating from Polygon (a faster, cheaper network often used for testing) to Ethereum (the most battle-tested public blockchain). A public network that no government, company, or hacker can secretly CHANGE.

Citizens hold their own credentials. Verification happens against a record that any individual can audit, but no one controls; pure sovereignty. Ethereum is not run by the government of Bhutan, a vendor, or a private consortium. It’s a public network maintained by thousands of independent operators worldwide. No government, company, or hacker can unilaterally alter identity records without that change being visible to the public.

It's ONE of the first times any nation has done this at scale. It's been tried previously and has failed. It raises a question that matters beyond blockchain, and the question I’m asking you...Can technology that was built for financial speculation actually make government work better for regular people?

It was (mostly) celebrated that Bhutan put IDs on Ethereum. But can 800,000 people recover their credentials when they lose their phones? Can a farmer in a small village prove she owns land without a bank seeing her medical history? Will the X% of rural citizens who aren't online yet get included or left behind? And will sovereignty reign if corporations own blockchain?

Who is watching the watchers? I’m stuck on whether this is an effective step forward or not. Each bit of research has me doubting.

​

We’ve believed the blockchain works for years. The question is whether it works for people who don’t have the option to decide when and where to use it.

I’ve been wanting to build for everyone that isn’t ‘us’ since I got into web3 - those that are unbanked or exploited. Is enabling this the right move?

Should we rally a call to build for others, or will Web3 remain a fragmented casino?

​

GovTech Secretary Jigme Tenzing on why they chose Ethereum over Polygon:

"By moving to Ethereum, we are further strengthening the security of our digital identity. Ethereum is one of the most decentralized blockchains in the world, making it virtually impervious to disruption."

Bhutan decided against vendor lock-in; it chose a system that's not dependent on any single company's technology. If the vendor who built their identity system disappeared tomorrow, the underlying infrastructure would still work because it runs on open, public standards that anyone can build on... no single point of failure. No government or company can quietly alter records. No single point of failure, AND no government or company that can quietly alter records.

This week, Bhutan further anchored its identity on Ethereum and announced TER (a sovereign gold-backed token launching on Solana on December 17). Bitcoin mining since 2019, digital ID on Ethereum, tokenized gold on Solana. Bhutan is building full-stack digital sovereignty.

​

Many people believe that digital identity (blockchain or not) is inherently dangerous: biometric data collected, every transaction tracked, social credit scores, programmable money that can be turned off. Given what I just described (a system that could track everything you do), they're not wrong to worry.​

However, the architecture can determine the outcome. Centralized databases make mass surveillance easy; systems that put users in control of their credentials and reveal only what’s strictly necessary change the power dynamics entirely.

The question isn't whether digital ID can become a tool of control. It obviously can. The question is whether there's a version that doesn’t, and whether Bhutan's approach gets us closer to that or further away. Bhutan’s approach pushes in that direction by minimizing centralized control, limiting data disclosure by default, and making changes publicly auditable. That doesn’t guarantee safety, but it could materially raise the cost of misuse. Isn’t that what we’re looking for?

Meanwhile, in the UK, 2.97 million people have just signed a petition opposing mandatory digital ID, the fourth-largest petition in British parliamentary history. Parliament debated it on December 8. The EFF called it "structurally incompatible with a rights-respecting democracy." The government's response? Going ahead anyway. Mandatory for right-to-work checks by 2029.

In most countries, your ID lives in a government database you can't see. If someone alters your records (accidentally or not), you might not know until you’re denied a loan or a passport.

Bhutan's system puts the credential in the hands of the people (right…RIGHT?). The government issues it, but you hold it.

When you need to prove something (your age, your address, your citizenship), you share a cryptographic proof, not a photocopy of your documents. Verification occurs against a public ledger that no one, including the government, can secretly edit.

It's the difference between keeping your savings in a bank that might freeze your account versus holding cash in a safe you control. Except the "safe" is based on math, and anyone can verify it's real without seeing what's inside. But what happens when the people with that control (the users) don’t have the understanding of how to access?

This choice was a three-year journey through different tech stacks, and the choices they made tell you a lot about their priorities.

The path: Hyperledger Indy → Polygon → Ethereum mainnet

What this means: Bhutan tested with private tech, launched nationally on a cheaper network, then moved everything to Ethereum - the most expensive but most secure option.

Most projects go the other direction to save money. Bhutan paid more because for a national ID system, "nobody can tamper with this" matters more than "this is cheap to run."

​

​

• Decentralized Identifier (DID): Each citizen receives a unique cryptographic identifier recorded on-chain (a verifiable username no one controls).

• Verifiable Credentials (VCs): Institutions issue digitally signed documents stored in the citizen's wallet (off-chain). These include citizenship certificates, driver's licenses, health records, and educational credentials.

• Cryptographic Proofs: When verification is needed, the citizen generates a proof pulled from their verifiable credential. The verifier checks the evidence against the issuer's decentralized identifier on Ethereum without learning anything else.

• In plain English: Instead of handing over your entire ID card so someone can check your age, you hand over a sealed envelope that says "yes, this person is over 18” and the math proves you're not lying. The verifier never sees your birthdate, your address, or your photo. They just get a yes or no.

This separation (credentials off-chain, trust anchors on-chain) is the hinge of privacy. Personal data stays in the user's possession, while anyone can verify authenticity.

​

​

According to Biometric Update and iDen2's partnership announcement. The following metrics come from Biometric Update (a trade publication covering identity technology) and from a partnership announcement by iDen2, a digital identity company that later partnered with Bhutan to export its system globally. These are the numbers Bhutan is publicly claiming—worth noting they come partly from sources with a stake in the project's success:

• 78% of Bhutan's rural population now accesses government services digitally

• 70% reduction in per-transaction service delivery costs

• 45% increase in financial service access

• 90,000+ foundational identity documents issued

• 14 G2C (government-to-citizen) services integrated

• 10+ integrations with government and private sector services

NB: Bhutan is 70% rural, mainly mountainous villages, where getting to a government office might mean a full day's travel. If a farmer can prove land ownership or access a subsidy without leaving her village, that's the difference between participating in the formal economy or not.

​

The 45% increase in financial access matters because you can't get a bank account without an ID. You can't get credit. You can't receive government payments directly. For the previously unbanked, this is the on-ramp to everything else.

​

The 70% cost reduction shows this might actually stick. Governments don't maintain systems that cost more. They keep systems that save money.

​

Here's where I get a little skeptical. Because the crypto world has been claiming "blockchain will revolutionize identity" for about a decade now, and mostly it hasn't.

​

• Estonia has been running an excellent digital government since the early 2000s.

• 1.3 million people.

  • PKI (Public Key Infrastructure)- Based smart cards.

  • Digital signatures for everything.

…It works beautifully.

And Estonia's system isn't on a public blockchain.

So what does blockchain actually add that Estonia doesn't already have?

​

​

​

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• Bhutan's bet makes sense for their specific priorities:

• A small nation wanting maximum resilience against external pressure

• Transparent accountability for citizens

• Positioning for globally portable digital identity.

The "globally portable identity" part is the long game. Right now, a Bhutanese credential only matters in Bhutan. But if the EU's digital wallet rollout normalizes the same standards (W3C, eIDAS), suddenly Bhutan's citizens have credentials that work across borders.

For a small country whose economy depends on tourism and whose citizens often work abroad, that portability isn't abstract—it's economic infrastructure.

​

The tech is fine. The tech has been fine for years. Here's what will actually make or break this:

Privacy That Regular People Can Use

On paper, the architecture looks great… data off-chain, cryptographic proofs, zero-knowledge selective disclosure.

In practice? We’ve watched too many "privacy-preserving" systems fail because the UX is impossible for anyone who isn't a high-level engineer.

​

Kirill Avery (CEO of Alien, a decentralized identity network) put it bluntly:

"Putting national IDs directly on a public chain like Ethereum could be a double-edged sword. Transparency is good for auditability, but not for privacy. Once credentials live on-chain, they live forever, and that permanence can quickly turn into surveillance if not handled with extreme care."

​

Technologies already proven in production:

• Rarimo ZK Passport: Uses biometric passport NFC scans to create local ZK proofs of nationality/age. Users verify citizenship "incognito" without revealing any other information. Proofs generated entirely on-device.

• Privado ID (formerly Polygon ID): Built on Iden3 protocol and Circom toolkit. "Private-by-default" credential checks. Users verify credentials without ever revealing personal information through zkSNARK circuits.

• zkSync / QuarkID (Buenos Aires): Already serves 3.6 million residents with municipal credentials verified by zero-knowledge proofs.

• Pairwise DIDs: Unique identifiers for each relationship (one DID for banking, another for healthcare) to prevent cross-context correlation.

• ZK-proof selective disclosure: Prove "I am over 18" without revealing birthdate.

• Public privacy audits: Commission independent cryptographers to review what data patterns are visible on-chain.

You hold your own keys. You lose your phone, forget your password, or your house floods. Now what?

In a truly self-sovereign system, nobody can help you—that's the point. But that also means you can permanently lose access to your identity. For 800,000 people, including elderly farmers in remote villages, that's not empowerment. That's a disaster waiting to happen.

Bhutan's Recovery Mechanism

According to DHI leadership, Bhutan implemented a recovery process where "only the individual has the right to recover [their data]… not the government or any other entity."

The likely flow:

1. Citizen loses phone

2. Visits government office with physical ID

3. Official verifies identity through existing records and biometric matching

4. Once verified, new credentials issued to new device

5. Blockchain shows: old DID marked as recovered, new DID issued

Target Metrics:

• 95% of users recovered within 72 hours

• Zero PII viewed by staff during recovery

• Recovery shouldn't require technical expertise

78% of rural Bhutan already accesses digital services.

But I care more about the other 22%. Who are they? Probably the poorest, the oldest, the least connected. The people who most need government services and are least able to navigate digital systems.

If this project only works for people who already have smartphones and digital literacy, it's not inclusion—it's another system that serves people who were already being served.

​

​

The goal is to ensure that digital identity expands access rather than creating new barriers.

• 6,150+ BTC ($562 million)

• 656 ETH (~$2.73 million)

• 320 ETH staked via Figment (November 2025)

Bhutan holds over half a billion dollars in Bitcoin and stake in Ethereum. When a government puts that much of its own money into crypto infrastructure. They're betting their treasury that this technology will be around long-term. That's a different kind of commitment than a press release.

Governance Needs:

• Independent privacy commission with audit authority

• Citizen appeals process for credential correction

• Quarterly ledger audits published openly

• Time-locked contract upgrades, multi-sig approved

• Annual "function-creep" review by civil society

I've been in crypto long enough to remember a lot of "this will change everything" projects that didn't. Before we get too excited about Bhutan, let's remember why previous attempts failed.

​

"Blockchain voting" that failed independent security audits. The blockchain didn't make it secure—poor implementation made it vulnerable.

Lesson: Saying "blockchain" doesn't magically make something safe.

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A "voluntary blockchain nation" that recorded marriages and births on Ethereum. Collapsed under governance chaos because you actually need institutions for identity to mean anything.

Lesson: Pure decentralization without legal recognition or support structures doesn't work.

Rapid enrollments, widespread bans. Turns out, when you collect iris scans from millions of people, regulators get nervous.

Lesson: Just because you can collect data doesn't mean you should.

Bhutan combined the tech with actual institutional backing. Royal endorsement. Parliamentary oversight. Government agencies are integrated. Support channels when things go wrong.

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Ready Now:

• Small, high-trust states: Estonia, Singapore, Rwanda, Uruguay

• African leapfrogs: Kenya, Rwanda, Ghana (already mobile-first with M-Pesa)

• Cities testing before nations: Buenos Aires, Dubai, Montevideo

EU Interoperability Opportunity:

• EUDI Wallet rollout by 2026 normalizes verifiable credentials for 400 million people

• Bhutan's W3C/eIDAS compliance positions it to plug into that ecosystem

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In August 2025, Bhutan NDI partnered with iDen2 to launch Phenix—an end-to-end identity solution aimed at other governments and enterprises.  Phenix is:

• Modular architecture

• Standards compliant (ISO/IEC 24760, GDPR, eIDAS, W3C)

• Built on Bhutan's real-world deployment experience

"The launch of Phenix represents our commitment to democratizing digital identity deployment globally. Having successfully navigated the complexities of national digital identity deployment in Bhutan, we understand what governments need." — Jacques Von Benecke, CEO of Bhutan NDI.

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The crypto world celebrates or condemns this for various reasons. Fine.

But I care about whether it actually helps people. A large number of people worldwide lack formal identification. Without it, you can't open a bank account, prove your qualifications, or vote. You're excluded from the formal economy through no fault of your own.

Traditional approaches either create surveillance states or leave everyone managing fifteen different passwords for fifteen different institutions.

Bhutan is trying a third way: decentralized infrastructure that's user-controlled but government-enabled. If it works, it matters a lot more than just one small kingdom.

If it doesn't, at least we'll learn something. FIDO just launched a digital credentials initiative and THAT is something to pay attention to.

• Is "self-sovereign" actually meaningful if the government still controls issuance and recovery?

• What would it take for this to work in a country where people don't trust their government?

• Am I being too optimistic or too skeptical here?

The right next move is to focus on the necessary institutional and UX infrastructure: zero-knowledge tooling, privacy-preserving recovery, and analog off-ramps. If the Web3 ecosystem fails to provide these tools, then yes, it risks remaining a casino—because the real-world application will fail on the human front, regardless of the brilliance of the code.

Aya Miyaguchi (Ethereum Foundation President):

"Today, Bhutan celebrates a historic milestone, becoming the first nation to anchor its national digital identity system on Ethereum... It's deeply inspiring to see a nation commit to empowering its citizens with self-sovereign identity."

Jigme Tenzing (GovTech Secretary):

"By moving to Ethereum, we are further strengthening the security of our digital identity. Ethereum is one of the most decentralized blockchains in the world, making it virtually impervious to disruption."

Vitalik Buterin (Ethereum Co-founder):

"Decentralized digital identity empowers people by giving them more secure control over their data and their online lives. Bhutan's embrace of an open architecture on Ethereum reflects why we build this platform: to drive meaningful, positive change through open-source technology."

Ujjwal Deep Dahal (DHI CEO):

"NDI is the foundational layer of the digital economy... on this layer, we can build numerous applications."

Jacques Von Benecke (Bhutan NDI CEO):

"Our Digital Signature Platform is more than just an upgrade to electronic signing—it's a leap forward in digital trust. By combining decentralized identity, cryptographic verification, and a human-friendly signing experience, we've built a system that ensures every document signed carries the same weight of authenticity years into the future as it does today."

Kirill Avery (Alien CEO, Privacy Expert):

"Putting national IDs directly on a public chain like Ethereum could be a double-edged sword. Transparency is good for auditability, but not for privacy. Once credentials live on-chain, they live forever, and that permanence can quickly turn into surveillance if not handled with extreme care."

PM Lyonchhen Tshering Tobgay:

"We're connecting Bhutan to the global ecosystem with an interoperable, user-owned identity system that is secure, transparent, and inclusive."

​

Official Announcements & Government Sources

• Bhutan Broadcasting Service (BBS) — "HRH Gyalsey graces event announcing NDI-Ethereum integration" (Oct 14, 2025)

• https://www.bbs.bt/news/?p=201233

• Aya Miyaguchi (@AyaMiyagotchi) — Launch announcement on X (Oct 13, 2025)

  

  Aya Miyaguchi

  @AyaMiyagotchi

  1/ Today, Bhutan celebrates a historic milestone, becoming the first nation to anchor its national digital identity system on Ethereum.
  @VitalikButerin and I were honored to join the launch ceremony on behalf of the Ethereum community, graced by His Royal Highness.

  

  2,792

  6:09 PM • Oct 13, 2025

Primary News Coverage

• Decrypt — "Bhutan to Anchor National Digital ID on Ethereum by Early 2026" (Oct 14, 2025) — Vince Dioquino

• https://decrypt.co/204233/bhutan-anchor-digital-id-ethereum

• Cointelegraph — "Bhutan migrates its national ID system to Ethereum" (Oct 13, 2025) — Brayden Lindrea

• https://cointelegraph.com/news/bhutan-migrates-id-system-ethereum

• The Block — "Bhutan to anchor its national digital identity system on Ethereum" (Oct 14, 2025)

• https://www.theblock.co/post/374480/bhutan-migrates-national-digital-id-system-ethereum

• Unchained — "Bhutan Migrates National Digital Identity to Ethereum" (Oct 14, 2025)

• https://unchainedcrypto.com/bhutan-migrates-national-digital-identity-to-ethereum/

• Biometric Update — "Bhutan begins migrating self-sovereign digital ID to Ethereum" (Oct 14-15, 2025) — Chris Burt

• https://www.biometricupdate.com/202510/bhutan-begins-migrating-self-sovereign-digital-id-to-ethereum

• Biometric Update — "Bhutan NDI partners with iDen2 to export benefits" (Aug 26, 2025) — Lu-Hai Liang

ZK/Privacy Technology Documentation

• Rarimo Docs — ZK Passport

• https://docs.rarimo.com/zk-passport/

• Rarimo Medium — "Proof of Citizenship: Passport ZKPs and Incognito Identity" (Jan 16, 2025)

• https://rarimo.medium.com/proof-of-citizenship-passport-zkps-and-incognito-identity-2025

• Polygon Blog — "Introducing Polygon ID: Zero-Knowledge Identity for Web3" (Mar 2022)

• https://blog.polygon.technology/introducing-polygon-id-zero-knowledge-identity-for-web3

• Privado ID Docs — On-chain verification

• https://docs.privado.id/docs/verifier/on-chain-verification/overview/

• Spruce ID Blog — "Sign-in with Ethereum for Governments" (Apr 2024)

• https://blog.spruceid.com/sign-in-with-ethereum-for-governments

• Gitcoin Docs — Passport v2 Whitepaper

• https://docs.gitcoin.co/passport-v2-whitepaper

• Cointelegraph — "Buenos Aires rolls out blockchain-based ID for 3.6M residents" (Oct 22, 2024) — Ana Paula Pereira

Comparative Systems & Policy

• European Commission — EUDI Wallet Overview (2025)

• https://digital-strategy.ec.europa.eu/en/policies/eudi-wallet

• World Bank — ID4D Principles

• https://id4d.worldbank.org/

• India UIDAI — Aadhaar Official

• https://uidai.gov.in/

• TechPolicy.press — "Lessons from National Digital ID Systems" (Jun 25, 2025) — CJ Larkin & Renée DiResta

• https://techpolicy.press/lessons-from-national-digital-id-systems

Failed Projects / Cautionary Tales

• MIT Internet Policy — Voatz Security Analysis (2020)

• https://internetpolicy.mit.edu/voatz-analysis

• Wikipedia — Bitnation

• https://en.wikipedia.org/wiki/Bitnation

• Reuters — "Privacy Regulators Probe Worldcoin" (Aug 2024)

• https://www.reuters.com/technology/worldcoin-privacy-investigations-2024-08-01

Financial Inclusion Context

• Stanford Social Innovation Review — "Working Toward Financial Inclusion With Blockchain" — Cecilia Chapiro

• https://ssir.org/articles/entry/working_toward_financial_inclusion_with_blockchain

• Frontiers in Blockchain — "Blockchain technology for digital financial inclusion" (Jan 27, 2023)

• https://www.frontiersin.org/journals/blockchain/articles/10.3389/fbloc.2023.1035405/full

• CSIS — "Unlocking Financial Inclusion" (May 1, 2025)

• https://www.csis.org/analysis/unlocking-financial-inclusion

Standards & Technical References

• W3C — DID Core Specification

• https://www.w3.org/TR/did-core/

• W3C — Verifiable Credentials Data Model

• https://www.w3.org/TR/vc-data-model-2.0/

• Wikipedia — Self-sovereign identity

• https://en.wikipedia.org/wiki/Self-sovereign_identity

• Wikipedia — Zero-knowledge proof

• https://en.wikipedia.org/wiki/Zero-knowledge_proof

Bhutan Crypto Holdings Context

• CoinDesk — "Bhutan Has Been Secretly Mining Bitcoin Since 2020" (May 2023)

• https://www.coindesk.com/business/2023/05/01/bhutan-secret-bitcoin-mining-2020

• Bloomberg — "Bhutan's $1.3 Billion Bitcoin Treasury and Crypto Strategy" (May 2023)

• https://www.bloomberg.com/news/articles/2023-05-01/bhutan-bitcoin-treasury-and-crypto-strategy

• https://opengovdata.io/

• https://ssir.org/articles/entry/working_toward_financial_inclusion_with_blockchain

• https://fintechmagazine.com/articles/crypto-regulations-and-building-financial-inclusion

• https://en.wikipedia.org/wiki/Bitnation

• https://www.ccn.com/news/crypto/indian-city-amravati-government-records-on-the-blockchain/

• https://platform.keesingtechnologies.com/brazils-bold-new-blockchain-based-digital-id/

Newest Additions:

• https://decrypt.co/351928/bhutan-launches-sovereign-gold-backed-token-solana

• https://petition.parliament.uk/petitions/730194

• https://petition.parliament.uk/petitions/730194

• https://ec.europa.eu/digital-building-blocks/sites/spaces/EUDIGITALIDENTITYWALLET/pages/924975727/EUDI+Wallets+Launchpad