Digital Identity New Revolution, Personal Data Under Your Control.

Author: BLOCKHEAD

Translation: Baihua Blockchain

The Kingdom of Bhutan in the Himalayas is betting on Ethereum to build the world's first national identity system based on a public blockchain—reimagining the relationship between citizens and their data in the process.

This week, the Kingdom of Bhutan announced its decision to migrate its national digital identity system from Polygon to Ethereum, causing a stir in the blockchain world. The move is planned to be completed by the first quarter of 2026, making this Himalayan nation a pioneer in sovereign identity management using public blockchain infrastructure.

Ethereum co-founder Vitalik Buterin and Ethereum Foundation chair Aya Miyaguchi attended the launch ceremony, indicating that its significance goes beyond a simple technical migration. As Miyaguchi stated in a post on X, Bhutan becomes "the first country to anchor its national digital identity system on Ethereum," marking a milestone moment for blockchain applications at the national level.

Bhutan did not adopt blockchain for identity management overnight. Its National Digital Identity (NDI) system was first launched in 2023, when His Royal Highness The Gyalsey became the country's first digital citizen. The system was initially built on Hyperledger and later transitioned to Polygon in August 2024, favored for its zero-knowledge protocols and scalability promises for handling high transaction volumes.

Now, less than a year later, Bhutan is turning to Ethereum again. According to Jigme Tenzing, Secretary of Bhutan's Government Technology (GovTech), this decision is primarily based on enhanced security: "By transitioning to Ethereum, we further strengthen the security of our digital identity."

Ethereum is the second-largest blockchain by market capitalization and the dominant platform for decentralized applications. Choosing Ethereum signifies Bhutan's commitment to using battle-tested decentralized infrastructure to support critical national systems in the long term.

Understanding Self-Sovereign Identity

At the core of Bhutan's NDI system is the concept of Self-Sovereign Identity (SSI), representing a paradigm shift in how we think about digital credentials. Unlike traditional identity systems where governments or corporations control your data, SSI empowers individuals to own and manage their digital identities.

In practice, this means that Bhutan's nearly 800,000 residents can store digital credentials such as driver's licenses, educational certificates, and health records in secure digital wallets controlled by themselves. When accessing government services or proving their identity online, citizens can precisely decide what information to share and with whom, transmitting only the necessary credentials rather than handing over comprehensive personal data.

SSI provides users with greater autonomy over their personal information, allowing them to control who can access and use that information, thus offering a higher level of privacy protection since data is no longer controlled by centralized entities. The blockchain serves as an immutable record for credential issuance and verification, but crucially, sensitive personal data itself is not stored on-chain. Instead, the authenticity of credentials is verified through cryptographic proofs without exposing the underlying information.

This architecture addresses several key vulnerabilities in traditional identity systems. Centralized databases create "honeypots" for hackers: breaching one system can jeopardize the identities of millions. The decentralized platform enabled by SSI allows users to provide only specific details to verifiers through blockchain and verifiable credential technology, thereby reducing the risk of identity theft while complying with existing privacy regulations.

Why Choose Bhutan? A Small Country with Grand Digital Aspirations

For a South Asian nation with a population of less than one million, Bhutan's strong push for blockchain-based identity management may seem surprising, but several factors give it a unique advantage in achieving this digital leap. Scale becomes an advantage here—thanks to its compact population, Bhutan can implement and iterate innovative systems more quickly than larger countries burdened by legacy infrastructure and bureaucratic inertia.

Bhutan's willingness to embrace cryptocurrency and blockchain technology sets it apart from most countries. Bhutan has been actively mining Bitcoin using its abundant hydropower resources, turning its renewable energy advantage into digital assets. According to Bitbo, the country ranks sixth globally in Bitcoin reserves, holding 11,286 Bitcoins valued at $1.28 billion; according to StrategicETHReserve, it also holds 495.44 Ether.

Guided by a governance philosophy that prioritizes "Gross National Happiness" over GDP growth, Bhutan creates space to experiment with systems that prioritize citizen empowerment and data sovereignty over pure economic efficiency—aligning perfectly with the values of personal autonomy and trust-based governance inherent in the SSI system. By establishing a national blockchain identity system, Bhutan positions itself as a potential hub for blockchain innovation and testing in South Asia, with its NDI system potentially serving as a blueprint for other developing countries seeking to leapfrog traditional identity infrastructure.

Bhutan's choice of Ethereum over other blockchain platforms reflects a dual consideration of pragmatism and philosophy. As one of the most decentralized blockchain networks globally, with hundreds of thousands of validators, the security provided by Ethereum makes it extremely difficult for any single entity to tamper with identity records. Its robust developer community support and institutional adoption ensure the long-term stability required for a national identity system. Building on Ethereum also opens the door to interoperability with a vast ecosystem of decentralized applications, creating possibilities for future innovations across various fields, from decentralized finance to digital governance.

Perhaps most importantly, as Miyaguchi articulated, "Bhutan's transformation reflects the original intent of Ethereum's design—to empower individuals with sovereignty over their data, establish trust without central points of failure, and create inclusive digital systems centered around people." While Polygon offers faster transaction speeds and lower costs, when a country bets its identity infrastructure on blockchain technology, the foundational security and decentralization provided by Ethereum are ultimately the most critical factors.

Global Context

Bhutan is not the only country exploring the use of blockchain for national identity systems, although it may be the first to fully adopt a public blockchain like Ethereum for this purpose.

Over 214 million citizens in Brazil are expected to use blockchain technology for digital identity, with the states of Rio de Janeiro, Goiás, and Paraná being the first to issue identity documents on-chain. The Brazilian government has introduced a blockchain network to enhance the security of data sharing between the Federal Revenue Service and civil identity recognition agencies, supporting the operations of the tax authority.

However, Brazil's approach differs from Bhutan's in scale and implementation. Bhutan is transitioning to a fully public blockchain (Ethereum), while Brazil's system seems to focus more on inter-agency data sharing and may utilize more permissioned blockchain architectures.

Vietnam launched a national-level blockchain called NDAChain for digital identity and records, which has 49 validator nodes overseen by public institutions and large enterprises, aimed at serving government and business needs.

NDAKey enables citizens to verify claims about their identity in real-time, which is a crucial part of Vietnam's fight against fraud, impersonation, and scams in an increasingly digital economy.

Vietnam established a comprehensive national blockchain strategy in October 2024, aiming to create 20 major blockchain platforms and position the country among the top ten in blockchain research in Asia. This represents a more systematic, government-led approach compared to Bhutan's focused identity initiative.

A "Human-Centered" Digital Future

Despite the challenges, Bhutan's commitment to blockchain-based identity management represents a reimagining of the relationship between citizens and government in the digital age.

As more aspects of our lives—from healthcare to finance to education—shift online, the question of who controls our digital identity becomes increasingly important. Bhutan's answer prioritizes personal sovereignty, security through decentralization, and transparency through open blockchain infrastructure.

Whether other countries will follow Bhutan's lead remains to be seen. But as the world watches this Himalayan nation implement one of the most advanced national identity systems ever, one thing is clear: the future of digital identity is being written on the blockchain, one citizen at a time.

For Bhutan's 800,000 residents, this future will begin on Ethereum in early 2026.

Article link: https://www.hellobtc.com/kp/du/10/6079.html

Source: https://www.blockhead.co/2025/10/14/self-sovereign-identity-goes-national-inside-bhutans-ethereum-transition/

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