The European Union (EU) has implemented a new regulation regarding digital identity, which requires member states to provide EU digital identity wallets to all citizens and residents. This regulation, known as the European Digital Identity (EUDI) regulation, was updated on May 21 and is set to be fully implemented by 2026. The introduction of these digital ID wallets is expected to revolutionize the way Europeans live and work, as they can be used for electronically signing and storing various documents, from university diplomas to train tickets. Thierry Breton, the EU commissioner for the internal market, believes that these wallets will seamlessly integrate convenience, safety, and privacy, transforming the way individuals and businesses engage with online services.
To test the EU Digital Identity Wallet, the European Commission has invested 46 million euros ($50 million) in four large-scale pilots. They have also announced a second call for additional large-scale pilots to further support the deployment of these wallets. However, the introduction of these wallets raises concerns about the appearance and functionality of government-issued digital ID wallets, as well as how individual privacy and regulatory compliance can be maintained on a large scale.
Cointelegraph spoke to Dr. Jonas Gross, the CEO of Hakata, a company that provides privacy solutions for Web2 and Web3 businesses. The discussion aimed to understand the challenges developers face when integrating privacy-preserving features into digital ID solutions and find ways to overcome these obstacles. Dr. Gross emphasized the importance of a user-centric design and a privacy-first approach for digital identity solutions, particularly the EU digital identity. He believes that users should have the freedom to decide which data is shared and with whom, and this sovereignty should be a fundamental principle in the EU identity infrastructure.
To ensure privacy and the confidentiality of personal information, Dr. Gross suggested using zero-knowledge proofs (ZKPs), a Web3 tool that allows users to only reveal cryptographic proofs instead of clear data. This preserves their privacy while still providing the necessary information. For example, in the context of an identity solution, a specific ZKP could be used to verify someone’s age instead of revealing their entire ID when purchasing alcohol. Dr. Gross emphasized that ZKPs can take various forms and be used to verify different types of information in the context of identity. Hakata is currently building out this solution.
While implementing ZKPs may seem like a straightforward solution, developers face challenges due to the lack of standardization in the ZK space. Each ZK tech stack works differently, making interoperability difficult. Additionally, the technology is still undergoing security evaluation in many countries before it can be used for governmental and regulated services. Dr. Gross also recommended making reference implementations, like the EUDI Wallet Reference Implementation, available open-source on GitHub. This would allow individuals to verify that the highest privacy standards are met.
Overall, this new regulation will require all member states to provide EUDI wallets to their citizens and make their use mandatory in various industries. According to Dr. Gross, this development will help the EU rebuild its online infrastructure and integrate digital identity into all relevant workflows of its digital ecosystem. The introduction of EUDI wallets will eliminate the need for physical IDs and provide individuals with a convenient and secure way to access their digital identity.