Entering the digital identity space is like stepping into a world where familiar words have unfamiliar meanings. Even seasoned professionals from tech, finance, or government often carry assumptions that don’t quite apply. In this article, I share the most common misunderstandings I encountered (and held myself!) when learning about this domain—hopefully saving you a bit of confusion along the way.

1. Digital Identity ≠ Digital ID

It’s easy to assume that “digital identity” just means a digital copy of your national ID card. But in reality, digital identity is a much broader concept:

It refers to the entire set of data, processes, and relationships that allow a person (or device or organization) to be uniquely identified online. A Digital ID—like a digital passport or national eID—is just one credential within that ecosystem.

2. Digital Wallet ≠ Mobile Wallet

Many people confuse digital identity wallets with payment wallets like Apple Pay, PayPal or Vodafone Cash.

· A mobile wallet holds money or payment instruments.

· A digital identity wallet holds credentials: your driver’s license, university degree, health certificate, etc. Some systems (like India’s DigiLocker or the upcoming EU Digital Wallet) are now exploring hybrids, but the two serve fundamentally different roles.

3. Self-Sovereign Identity (SSI) ≠ Data Ownership

One of the most attractive features of SSI is that it gives users control—but it’s not about owning your data like property.

You still rely on issuers (e.g., a university or government) to issue credentials and on verifiers to trust them. SSI ensures you decide when, where, and what to share, not that you own the facts about yourself.

4. Verifiable Credentials ≠ Digital Certificates

The word “credential” might sound like a secure PDF or a digital certificate, but verifiable credentials (VCs) are much more flexible.

They’re machine-readable, tamper-evident, and follow standards like W3C VC, allowing for selective disclosure (e.g., proving you're over 21 without showing your full birthdate). They're closer to structured digital claims than documents.

5. Blockchain Is Optional

You’ve probably heard people equate decentralized identity with blockchain. But here’s the truth: blockchain is a tool, not a requirement.

Most SSI systems use blockchains for storing Decentralized Identifier (DID) registries, revocation lists, or audit trails—but credentials and personal data are never stored on-chain. Other models use non-blockchain trust registries or cryptographic key exchanges.

6. Interoperability ≠ Instant Integration

SSI and digital identity advocates often talk about “interoperability.” That doesn’t mean you can plug any wallet into any system and expect it to work seamlessly.

Interoperability is about standards—agreed-upon protocols and data formats (like ISO 18013-5, W3C VCs). Integration still requires work: regulatory alignment, backend changes, and mutual recognition agreements.

7. Trust Comes from Frameworks, Not Just Tech

Even the best technology doesn’t guarantee trust. What matters is who issued the credential, under what rules, and who is willing to accept it.

That’s why trust frameworks are essential—they define the legal, operational, and technical rules that allow identities to be reliably accepted across sectors or borders.