Today Identity and Access Management (IAM) represents a core component of the Internet infrastructure,  without which users would not be able to obtain online services in a timely and scalable manner. Enterprise IAM infrastructures are well integrated into other enterprise infrastructure services — such as directory services — which provide control over employees and assets. In the case of Consumer IAM most end-users are oblivious to the underlying identity federation infrastructures that allow them to perform Web Single Sign-On (SSO) to various online services and which enables them to grant their mobile apps access to various personal resources (e.g. contacts list, calendar, etc).

The recent emergence of the Bitcoin system has created various discourses of the role of “blockchain identity”. Here the three notable fundamental features of Bitcoin are its combined use of:

• peer-to-peer network of physically distributed mining nodes,
• consensus-based transaction status agreement algorithm and
• restrictive scripting language (opcodes) for transaction expression.

These three aspects of the Bitcoin system provide mining nodes with true independence in processing transactions, subject only to the 51\% majority requirement of the consensus scheme. It is precisely this node-independence that translates to “user independence” in the sense of the user not being beholden to any one mining node (or a small minority of nodes) in the Bitcoin system.

However, it is this “user independence” (in the context of Bitcoin) that have led many to incorrectly extrapolate (speculate) that the same degree user independence can be achieved in all DLTs (distributed ledger technology) in general — something that is not necessarily true in DLTs generically speaking. The Bitcoin system is an instance of a DLT, but not all proposed DLTs possess the three fundamental features of Bitcoin.

Furthermore, many commentators have equated “user independence” (in Bitcoin) to “individual empowerment” in DLTs in general, a jump in speculation that is too far and which have led to confusion among the non-technical audience.

This misunderstanding regarding individual empowerment is exacerbated when the use of self-issued public-key pairs (in the Bitcoin system) is extrapolated to mean that these self-issued keys can be used as a “digital identity” for individuals in general. More specifically, the use of self-issued public-key pairs have led many to deduce (incorrectly) that a public-key used in the Bitcoin system can be “trusted” as a “digital identity” simply because it has been recorded on a transaction-block which has been replicated by all nodes on the peer-to-peer network.

That is, the existence of a key in transaction block is being confused with trust in the provenance and ownership of that key.

Some have even coined the term “trustless” when referring to the peer-to-peer network of mining nodes, forgetting that high-value transaction networks are built on both technical-trust and legal-trust — both leading to business and social trust.

It is worth recalling that this problem of digital identity versus public keys emerged first in the mid-1990s in the context of self-signed X509 certificates,  Simple PKI (RFC2693) and in the Pretty Good Privacy (PGP) system (RFC1991). Although an implementation of the PGP system may provide technical-trust, the PGP proposal was never broadly adopted by industry due to a lack of a corresponding model for business and legal trust.