The global decentralized identity market was valued at USD 181.8 million in 2021 and is projected to expand at a compound annual growth rate (CAGR) of 89.1% from 2022 to 2030, reaching an estimated revenue of USD 46.5 billion by 2030. This explosive growth is driven by rising cybersecurity threats, increasing digital fraud, and the urgent need for secure, user-controlled identity management systems across industries.
As businesses accelerate digital transformation, traditional identity and access management (IAM) systems are proving insufficient against modern threats like phishing, insider breaches, and identity theft. Decentralized identity (DID) solutions offer a next-generation alternative—enabling users to own and control their digital identities without relying on centralized databases vulnerable to attacks.
👉 Discover how decentralized identity is reshaping digital security and user control in 2025.
Key Market Drivers
Adoption of AI and Machine Learning in Identity Management
Artificial intelligence (AI) and machine learning (ML) are playing a pivotal role in advancing decentralized identity systems. These technologies enhance risk-based authentication by detecting unusual behavior patterns, flagging suspicious access attempts, and automating threat responses in real time.
For instance, AI-powered decentralized systems can analyze login behaviors—such as location, device type, and time of access—to dynamically adjust access permissions. This adaptive approach strengthens security while improving user experience by reducing unnecessary authentication steps.
Rising Demand for Secure Digital Identities
With the surge in remote work, e-commerce, and online banking, the volume of digital interactions has skyrocketed. Unfortunately, so have identity-related crimes. According to recent studies, identity theft cases have increased by over 40% globally since 2020.
Decentralized identity combats this by allowing individuals to store verifiable credentials on personal devices or blockchain-based wallets. These credentials can be shared selectively with service providers—without exposing sensitive data—ensuring both privacy and trust.
Regulatory Pressure and Compliance Needs
Governments and regulatory bodies worldwide are tightening data protection laws, such as GDPR in Europe and CCPA in California. Organizations face steep penalties for data breaches involving personally identifiable information (PII). Decentralized identity helps companies comply by minimizing data storage and enabling audit-ready access logs.
Moreover, DID supports Segregation of Duties (SoD) policies and automated access certifications—critical for passing compliance audits in sectors like finance and healthcare.
Market Segmentation Analysis
By Component: Software to Dominate Market Share
The decentralized identity market is divided into two main components: software and services. In 2021, the software segment held the largest share, driven by demand for automated identity governance tools.
Decentralized identity software enables:
- Real-time data discovery
- Automated compliance reporting
- Risk-aware access control
- Integration with AI/ML for behavioral analytics
Organizations use these platforms to centralize identity data across hybrid environments while maintaining strict access controls. As enterprises continue investing in intelligent IAM systems, the software segment is expected to maintain its dominance throughout the forecast period.
By Deployment Type: Cloud Emerges as Fastest-Growing Segment
While on-premises solutions remain popular among large enterprises due to legacy infrastructure, the cloud deployment model is growing at the fastest pace.
Cloud-based decentralized identity solutions offer:
- Lower upfront costs
- Scalability for growing businesses
- Faster deployment cycles
- Seamless integration with SaaS applications
Small and medium-sized enterprises (SMEs), in particular, are adopting cloud-based DID solutions due to their cost-efficiency and ease of implementation. Additionally, major cloud providers are integrating DID frameworks into their ecosystems, further accelerating adoption.
👉 See how cloud-based decentralized identity solutions are empowering businesses in 2025.
By Organization Size: Large Enterprises Lead Adoption
Large enterprises currently account for the largest market share in the decentralized identity space. These organizations operate complex IT environments with thousands of users and applications, making manual access management impractical.
Industries such as insurance, government, media, retail, and travel are leveraging decentralized identity to:
- Automate employee onboarding/offboarding
- Prevent insider threats
- Streamline compliance with regulations
- Reduce operational overhead
With digital transformation initiatives underway, large corporations are prioritizing zero-trust security models—where decentralized identity plays a foundational role.
By Industry Vertical: IT & Telecom to Grow Fastest
Among all sectors, IT and telecommunications are expected to witness the highest growth rate in decentralized identity adoption.
Key drivers include:
- Expansion of mobile broadband networks
- Growth in cloud computing and edge computing
- Increasing cyberattacks targeting telecom infrastructure
- Need for secure customer onboarding in digital services
Telecom companies are using DID to verify user identities during SIM registration, reduce SIM swapping fraud, and enable secure cross-platform authentication. Meanwhile, IT firms are embedding DID into enterprise software to support secure remote access and multi-cloud management.
Other high-adoption sectors include:
- BFSI (Banking, Financial Services, and Insurance): For KYC/AML compliance and fraud prevention
- Healthcare: To protect patient records and ensure HIPAA compliance
- Government: For national digital ID programs and citizen services
By Region: Europe to Hold Significant Market Share by 2030
Europe is poised to capture a substantial portion of the global market, supported by strong government backing and progressive data protection policies.
Countries like the UK, Germany, France, and the Netherlands are actively investing in national digital identity frameworks. For example:
- The UK’s GOV.UK Verify program has evolved into a decentralized model.
- The European Union’s eIDAS 2.0 regulation aims to establish a pan-European digital identity wallet by 2025.
Financial institutions such as Barclays, Lloyds Bank, and BBVA are already using machine learning-powered decentralized analytics to detect fraud and manage credit risk more effectively.
Asia Pacific is also emerging as a key growth region, driven by rapid digitization in India, China, and South Korea.
Competitive Landscape
The global decentralized identity market features a mix of established tech giants and innovative startups. Key players include:
- Microsoft Corporation
- Accenture Plc
- Ping Identity
- 1Kosmos Inc.
- Civic Technologies
- Wipro Limited
- Avast
- SecureKey Technologies
These companies are focused on:
- Launching new DID platforms
- Forming strategic partnerships
- Acquiring niche technology providers
Recent Industry Developments
- May 2022: Microsoft relaunched its identity products under Entra Verified ID, a decentralized credentialing system built on blockchain principles.
- March 2022: Avast acquired SecureKey Technologies to expand its decentralized digital ID portfolio for consumer applications.
Such moves highlight the growing corporate interest in self-sovereign identity solutions that empower users while enhancing security.
Frequently Asked Questions (FAQ)
Q: What is decentralized identity (DID)?
A: Decentralized identity is a digital identity framework that allows individuals or organizations to control their own identity data without relying on central authorities. It uses blockchain or distributed ledger technology to issue, store, and verify credentials securely.
Q: How does DID improve security compared to traditional systems?
A: Unlike centralized databases that store all user data in one place—making them prime targets for hackers—DID stores credentials locally on users’ devices. Access is granted via cryptographic proofs, reducing the risk of data breaches.
Q: Can small businesses benefit from decentralized identity?
A: Yes. Cloud-based DID solutions are scalable and affordable, making them ideal for SMEs looking to enhance security without heavy IT investment.
Q: Is decentralized identity compliant with GDPR and other privacy laws?
A: Yes. DID supports data minimization and user consent—core principles of GDPR—by allowing users to share only necessary information with service providers.
Q: What role does AI play in decentralized identity systems?
A: AI enhances DID by enabling risk-based authentication, detecting anomalous behavior, and automating access decisions based on real-time context.
Q: When will decentralized identity become mainstream?
A: With major tech companies adopting DID frameworks and governments launching national digital ID programs, widespread adoption is expected between 2025 and 2030.
👉 Learn how early adopters are gaining a competitive edge with decentralized identity today.
Conclusion
The decentralized identity market is undergoing rapid transformation, fueled by technological innovation, regulatory changes, and rising cyber threats. As organizations move toward zero-trust architectures and users demand greater control over their personal data, DID will become a cornerstone of digital trust.
From financial services to healthcare and telecom, industries are recognizing the value of secure, verifiable, and user-centric identity solutions. With a projected CAGR of 89.1% through 2030, now is the time for businesses to explore how decentralized identity can future-proof their operations.
Core Keywords: decentralized identity, digital identity, identity management, blockchain identity, AI in identity, cloud identity, zero-trust security, self-sovereign identity