3 IDtech Misconceptions
This is the third post in a series about IDtech. The first post, IDtech is the New Fintech is available to read on Forbes, and the second post, Intro to IDtech: How Decentralized Identity Will be Adopted, can be found here on my Medium.
If you’ve been following the SSI space over the last few months, it’s likely you’ve seen the term “IDtech” used to describe the product or “application layer” of the cutting-edge identity standards like verifiable credentials. I have spoken at length about this term, whether that is on Twitter, via Trinsic, or through my podcast, because I believe it can do for identity products what ‘FinTech’, ‘EdTech’, or ‘Medtech’ do for those categories of products.
The more I’ve seen IDtech used, the more I see three misconceptions cropping up into conversations.
❌ IDtech is a rebrand of SSI or decentralized identity.
❌ IDtech is overly broad.
❌ IDtech is a new category.
But before I address these misconceptions, I think it is worth clarifying what IDtech is.
How Can You Tell an IDtech Product When You See One?
Let’s start with a definition from a previous post:
IDtech is the name for the category of products that empower users to take control of their identity, share their data safely, and more securely access the things they need.
The most important thing to understand about IDtech is that it’s a word to describe a kind of product (as opposed to a philosophy, concept, or technology). Therefore, the first way to tell whether you’re talking about IDtech is to determine whether you’re talking about a tangible product that solves a problem for customers, or potential customers. Booked revenue is an indication that something has moved beyond “use case” and beyond “business case” into a full-fledged product.
If a fintech product helps you manage your money, an IDtech product helps you manage your identity and data.
It may be just as helpful to call out the things that don’t help you identify IDtech.
- The form factor doesn’t matter. Many IDtech products are mobile apps, while others are web-based, and others live in a browser extension or smart watch.
- The tech stack (e.g. use of web3 or blockchain) doesn’t matter either. Because IDtech describes a kind of product, not a technical approach, developers can draw from technologies in web2, web3, or web5 or (any number of future webs) to build their solutions.
- The industry vertical is also irrelevant. While I’ve seen IDtech companies in regulated industries like healthcare, finance, and government, I’ve seen adoption succeed in other areas as well.
Hopefully the stage is set and we all agree on what IDtech is. Now we can dive in to three common misconceptions.
Misconception #1: IDtech Is a Rebrand of Self-sovereign Identity or Decentralized Identity
I understand why this misconception exists. Given that my background and company is in the SSI and decentralized identity space, it is easy to see why people associate the term IDtech to those things when I use it. However, I consider anything that meets the two criteria of 1) empowering users with identity and 2) it is productized to fall under the broad IDtech umbrella. Products in this umbrella include things from Dentity to Clear to Axuall to Classpass to Portabl. Decentralization is not a binary; and these products all sit on a bit of a different spot on the spectrum of self-sovereignty — some are fully custodial while others are totally centralized.
At the risk of sounding like a broken record (I recently wrote a whole post about this), self-sovereign identity is a concept or an ideal. Decentralized identity generally refers to a set of technologies. But IDtech refers to a class of product — or said another way, the set of solutions to a particular problem.
All that being said, my personal belief is that in the long run, the winning IDtech products will be built using decentralized identity and will get users closer to self-sovereignty.
Misconception #2: IDtech Is Overly Broad
Another misconception is that IDtech is too broad of a term. Usually this stems from a belief that IDtech encompasses everything from Okta to Equifax to Onfido to Entidad. In reality, the only one of these I classify as an IDtech product is Entidad. Okta is an authentication infrastructure. Onfido is a verification widget. Equifax is a data aggregator. In fact, I’m aware of an IDtech product that uses Okta, Onfido, and Equifax together to achieve a particular user experience in their product.
Misconception #3: IDtech Is a New Category
Again, IDtech describes products that empower users to take control of their identity, share their data safely, and more securely access the things they need. These kinds of products have been around for decades. So despite the word only recently beginning to be used, products that fit this description are not new.
Dozens of IDtech products like those offered by Clear, Merit, and Airside were started over the last few decades, streamlining millions of consumers’ lives. Like the FinTech companies started in the early 2000s before open banking or fintech infrastructure, early IDtech companies had to blaze a trail of proprietary technology themselves. Fortunately, today decentralized identity represents a new way to build IDtech products — and infrastructure platforms such as Trinsic make it easier than ever. What used to take a whole team, millions of dollars, and years to build can now be done in a matter of weeks. So it’s easy to see why a surge of new-age IDtech companies are rising to the occasion.
IDtech Is About to Have Its Moment
Although IDtech is not a rebrand of “SSI” or “decentralized identity”, these technologies do check a lot of the boxes good IDtech products hope to achieve. And IDtech infrastructure companies (like Trinsic) that utilize SSI technologies are making it easier than ever to build IDtech products that serve specific industries or use cases.
An explosion of IDtech products is currently underway showing that IDtech is indeed the new Fintech. This revolution in identity products will transform how identity works today and make the world more accessible for all.
These ideas continue to develop. If you have feedback for me, or if you’re building an IDtech product, I’d love to hear from you — my DMs are open on Twitter and LinkedIn. You should also check out Trinsic, the best infrastructure for building IDtech products. If this post was insightful, please share it with others that will learn from it, and follow me so you don’t miss subsequent posts where I’ll dive deeper into the concepts and practices behind successful IDtech products.