Decentralized identity is an identity model that distributes trust across three roles: the issuer creates a credential, the holder stores and presents it, and the verifier checks it. Instead of a single central directory owning every identity decision, the model relies on cryptographic credentials, wallet software, and agreed trust rules. In practice, it is often implemented with verifiable credentials and selective disclosure, so a user can prove a fact without exposing unnecessary personal data.
This matters because it changes both security controls and attack paths. Defenders must protect issuer keys, wallet recovery flows, revocation services, and verifier logic, not just passwords and MFA. Attackers may target a compromised issuer to mint fraudulent credentials, steal a wallet to reuse valid claims, or abuse weak recovery to take over an identity. A good deployment is not defined by the word “decentralized” alone; it must also prove interoperability, auditability, and strong governance.