How Bhutan is shaping digital identity

In the fiscal year 2022–23, Bhutan exported 11 terawatt-hours of power to India, which is 75% of Bhutan’s hydropower. For years, the main revenue sources for Bhutan have been tourism and hydropower, thanks to its abundance of natural resources. However, Covid 2020 changed that entirely and showed how volatile the tourism sector could be.

The country realised how strongly it needed to pivot and diversify its revenue streams.

Bhutan renowned for its serene beauty and nature, with a population of merely 800,000, is now emerging as a pragmatic adopter of new digital infrastructure.

From excess hydropower to mining bitcoin, over the past few years, Bhutan has been trying to implement Decentralized identity, or DID, in its country for every transaction with Institutes and enterprises.

The goal is simple: to form a self-sovereign identity at the global level.

This simply means giving individuals greater control over their personal data and protecting it from third-party groups through Decentralized Identity, thereby reducing the risk of large-scale data breaches.

What is Decentralized Identity, anyway?

Imagine you go to buy a drink, naturally, they ask you for your ID card to confirm your age.

Normal ID cards always include name, DOB, address, and other vital personal information that is not required at the moment.

Now, imagine a credential that confirms your age without revealing specific details about you. Only you can decide what information to share and what can be viewed by others.

The concept of Decentralized Identity has long been gaining traction since the launch of the Bitcoin network in 2009.

The Yahoo breach in 2013–2018 jeopardized the privacy of billions of users by exposing sensitive information, including phone numbers and other data, revealing the necessity for a decentralized system not controlled by a single authority.

Decentralized Identity is built on the philosophy that only a user must own their data/ Identity. An identity that only a user can own and access at their will.

From logging in to social media accounts to random websites, the visitor always proceed through an authentication process that sends our email, phone no, and IP location to servers often centralized around the government or tech giants like Google, Facebook, etc., which makes it convenient for the user to access websites with fewer steps, but jeopardizes the safety of the network by putting trust in one giant authority.

Bhutan made history by being the early adopter country to adopt the National Digital Identity (NDI) platform, giving the citizens full autonomy over their personal data.

It successfully launched a self-sovereign identity (SSI) platform for its citizens that initially was on Polygon and later migrated to Ethereum on 13th Oct, 2025.

How does it work?

Decentralized identity is a distributed system structured on a blockchain that identifies users through verified credentials (VCs) and cryptography.

A verifiable credential(VC) is a digitally signed data document about the user, verified by the issuer using a digital signature created by using public-key cryptography.

It verifies the issuers through a private key and a public key.

To verify the legitimacy of the data, Anyone can verify the public key in a decentralized registry, often an open-source network like blockchain or a DID registry.

It doesn’t rely on any backend source or third-party centre to verify your data, making the steps more efficient and trustworthy.

The future of Decentralised identity.

“The global market for decentralized identity is projected to reach $77 billion by 2032, up from just under $21 billion in 2023, driven by demand for better privacy and user control.”

Like every other industry in the tech sector, the rise of artificial intelligence is strengthening identity verification by verifying biometrics and documents, detecting anomalies, and automating cryptographic tasks.

With the rise of digital currency, Bhutan has emerged with a digital finance strategy aiming to increase the digital economy’s GDP. Its NDI is seen as part of the greater digital economy vision of Bhutan, which is still in the process.

The public and enterprises, however, have raised concerns over the safety and privacy risks. Ultimately, successful or not, Bhutan’s experiment with decentralized identity could quietly set the blueprint for how identity is managed across the world.