Global Decentralized Identity Systems Market to Reach $24.85B by 2031 at 65.5% CAGR | Valuates Reports

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Aug 21, 2025, 10:22 ET

What is the market size of Decentralized Identity Systems?

BANGALORE, India, Aug. 21, 2025 /PRNewswire/ -- The global market for Decentralized Identity Systems was valued at US$ 760 million in the year 2024 and is projected to reach a revised size of US$ 24850 million by 2031, growing at a CAGR of 65.5% during the forecast period.

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What are the key factors driving the growth of the Decentralized Identity Systems Market?

The decentralized identity systems market is becoming a transformative force across industries.
These systems provide secure, user-centric solutions that tackle challenges in digital trust.
Growth is driven by:
- Rising privacy concerns
- Stronger regulatory support
- Increasing enterprise adoption
- Consumer demand for more control over personal data
They enable verifiable and portable identities, reshaping digital interactions between individuals and organizations.
The market outlook indicates rapid expansion fueled by:
- Improved interoperability
- Stronger ecosystem collaboration
Decentralized identity is more than just emerging tech—it represents a foundational shift toward:
- Transparency
- Inclusion
- Resilient digital infrastructure
The approach balances security, privacy, and convenience for all stakeholders.

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TRENDS INFLUENCING THE GROWTH OF THE DECENTRALIZED IDENTITY SYSTEMS MARKET

Non-biometric decentralized identity systems are gaining momentum as they provide flexible and privacy-centric methods of identity verification. These solutions rely on cryptographic keys, decentralized identifiers, and verifiable credentials to authenticate individuals without relying on physical traits. Organizations are drawn to this model as it reduces dependency on sensitive biometric databases, offering more user control and greater transparency. With increasing emphasis on privacy regulations and consumer demand for secure but non-intrusive authentication, non-biometric solutions are being adopted across multiple industries. They are particularly well suited for digital platforms, online services, and environments where identity verification must be fast, secure, and easily transferable. Their adaptability and alignment with privacy-first frameworks continue to fuel steady growth in adoption worldwide.

Biometric decentralized identity solutions combine the security of physical identifiers with the benefits of decentralized frameworks, making them highly attractive to organizations that prioritize both accuracy and trust. By using unique characteristics such as fingerprints, facial patterns, or voice, these systems ensure that identities are tied directly to individuals in a verifiable manner. Businesses increasingly adopt this approach to reduce identity fraud and to simplify authentication processes for end-users who value convenience. Decentralized storage of biometric templates ensures that sensitive information is not concentrated in vulnerable centralized databases, addressing concerns about data breaches. As organizations move toward passwordless and frictionless experiences, biometric decentralized identity platforms are becoming central in securing user interaction, improving both confidence and usability across digital ecosystems.

Telecom and IT industries are central to the rise of decentralized identity systems due to their role in providing the backbone for secure digital communication. Telecom operators face challenges such as SIM swap fraud and customer authentication, which decentralized identity can mitigate by providing stronger, user-controlled verification methods. IT enterprises adopt decentralized identity to enhance access management, streamline employee logins, and support secure cloud integration. Additionally, the rise of connected devices and IoT ecosystems makes decentralized identity crucial for authenticating billions of endpoints. This integration reduces operational risks and enhances user trust across networks. With telecom and IT firms often pioneering technological innovation, their widespread involvement ensures scalability and practical deployment of decentralized identity on a global scale.

Rising concerns about privacy and the misuse of personal information have made decentralized identity appealing across industries. Traditional centralized identity systems often expose users to risks through data breaches, while decentralized models allow individuals to retain ownership of credentials. Organizations are under mounting pressure from regulators and consumers to adopt systems that guarantee greater control over sensitive data. Decentralized identity directly addresses this demand by limiting the amount of personal information shared while ensuring its authenticity. This framework also supports compliance with stringent privacy laws by embedding consent mechanisms within identity exchanges. As organizations prioritize both consumer trust and regulatory compliance, decentralized identity emerges as a crucial tool to strengthen privacy protections and reduce the risks of large-scale data misuse.

Supportive regulatory frameworks are fostering the adoption of decentralized identity systems as governments push for secure and transparent digital services. Policies aimed at data protection encourage the move away from centralized identity structures prone to misuse and towards models that empower user control. Regulatory initiatives emphasize interoperability, trust frameworks, and verifiable credentials as key pillars of modern identity management. Organizations see compliance with these regulations as an opportunity to strengthen brand reputation while aligning with global standards. This regulatory momentum is accelerating innovation and collaboration between public and private sectors, with many agencies investing in decentralized identity pilots. As policies continue to evolve, companies are increasingly motivated to integrate these solutions as part of their long-term digital transformation strategies.

The acceleration of digital transformation across industries is a powerful catalyst for the growth of decentralized identity systems. Enterprises are rapidly adopting online platforms for customer interaction, employee management, and service delivery, creating demand for secure yet efficient identity solutions. Decentralized identity addresses this need by reducing friction during onboarding, streamlining authentication, and allowing seamless cross-platform use of credentials. As businesses strive for scalability in digital services, decentralized identity offers interoperability and portability that traditional models lack. This shift not only enhances user experience but also reduces administrative overhead associated with managing disparate identity databases. With enterprises investing heavily in digital-first strategies, decentralized identity is becoming a cornerstone technology enabling security, efficiency, and trust in rapidly evolving online ecosystems.

Identity theft and fraud are persistent challenges in the digital economy, and decentralized identity systems present a robust solution to mitigate these risks. By eliminating reliance on centralized repositories, these systems minimize single points of failure that fraudsters exploit. Users hold verifiable credentials in secure wallets, making it significantly harder for attackers to impersonate or manipulate identity records. Businesses benefit from reduced losses and enhanced consumer trust when adopting these frameworks. Decentralized identity also allows selective disclosure of information, limiting exposure of unnecessary personal details that could otherwise be exploited. In industries such as banking, retail, and online services, this fraud-resistant model is increasingly viewed as a necessity to safeguard digital interactions, creating a strong driver for adoption.

Large enterprises are at the forefront of deploying decentralized identity as part of their broader cybersecurity and compliance strategies. These organizations face complex challenges in managing employee, partner, and customer identities across multiple platforms and jurisdictions. Decentralized identity offers a scalable way to unify these systems while reducing administrative overhead and security vulnerabilities. Companies are attracted by the potential cost savings, reduced operational risk, and improved user experience provided by self-sovereign identity frameworks. Consulting firms and system integrators are advising enterprises to transition toward decentralized models to remain competitive and compliant in a rapidly changing landscape. As adoption expands across sectors, enterprise endorsement provides momentum for standardization and encourages smaller firms to follow suit, accelerating mainstream acceptance.

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What are the major product types in the Decentralized Identity Systems Market?

Biometric
Non-biometric

What are the main applications of the Decentralized Identity Systems Market?

BFSI
Government
Healthcare and Life Sciences
Telecom and IT
Retail and E-Commerce
Transport and Logistics
Media & Entertainment
Other

Who are the key players in the Decentralized Identity Systems Market?

Microsoft
Accenture Plc
R3
Avast
Validated ID
Serto
Ping Identity
Dragonchain
Nuggets
FINEMA CO., LTD.
Datarella GmbH
Civic Technologies
1Kosmos
IBM
InfoCert
Ontology
Spruce ID
TrueVett (VeriME)
Dock Labs
Metadium
Affinidi
Infopulse
Blockster Labs

What factors are driving the growth of decentralized identity systems globally?

Market Share Insights:
- Top seven producers together hold over 50% of the market share
- Microsoft is the largest producer with 10%+ market share
Production Regions:
- United States
- Europe
- China
- Southeast Asia
- Other key regions
Consumption Insights:
- North America leads with 40% of global market share
By Category:
- Biometric decentralized identity systems: 60%+ market share (dominant segment)
- Non-biometric systems: smaller share
By Application:
- BFSI (Banking, Financial Services, and Insurance): 35%+ share (largest segment)
- Telecom & IT: second largest
- Government: follows Telecom & IT

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What are some related markets to the Decentralized Identity Systems Market?

- Digital Identity Solutions Market

- Blockchain Identity Management Market

- Self Sovereign Identity Market

- Decentralized Identity Tools Market

- The global Identity Governance and Administration market is projected to grow from US$ 3778.4 million in 2024 to US$ 6621 million by 2030, at a Compound Annual Growth Rate (CAGR) of 9.8% during the forecast period.

- The global market for IDaaS (Identity-as-a-Service) was estimated to be worth US$ 4905 million in 2023 and is forecast to a readjusted size of US$ 6281.3 million by 2030 with a CAGR of 3.5% during the forecast period 2024-2030.

- Digital Identity Verification Market

- Biometric Authentication Solution Market

- Digital Wallets Market

- The global market for Identity (ID) Verification was valued at US$ 2908 million in the year 2024 and is projected to reach a revised size of US$ 4915 million by 2031, growing at a CAGR of 7.9% during the forecast period.

- The global Web 3.0 Decentralized identities (DIDs) market was valued at US$ 38 million in 2023 and is anticipated to reach US$ 260 million by 2030, witnessing a CAGR of 32.1% during the forecast period 2024-2030.

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