The intersection of digital identity management and public blockchain technology is evolving as companies seek innovative yet reliable ways to build digital trust. One of the latest advancements comes from IOTA, an open-source distributed ledger technology (DLT) developed for the Internet of Things (IoT) by the IOTA Foundation in 2015. IOTA has announced the Alpha release of its decentralized identity framework, IOTA Identity, which integrates self-sovereign identity (SSI), verifiable credentials, and privacy-oriented digital interactions. This framework, transitioning from the Stardust VM to the more secure MoveVM, aims to provide a secure and flexible environment for smart contracts. IOTA Identity guarantees data integrity through an immutable ledger while maintaining verifiable credentials off-chain for enhanced privacy and user control. The framework aims to establish a "universal layer of trust for the internet, " facilitating digital identities and enabling secure interactions among various entities based on SSI and W3C Decentralized Identity Standards.

Utilizing decentralized identifiers (DIDs), individuals and organizations can create and manage their digital identities, secured by cryptographic keys. The decentralized ledger ensures open access for transaction validation and maintains public auditability of identity proofs. Unlike traditional blockchains, IOTA employs a directed acyclic graph (DAG) called "the tangle" for transaction storage, eliminating the need for mining and associated costs. While it promises benefits such as decentralization, distribution, and trust without resource wastage, some critics question the true decentralization of its network due to reliance on a central "coordinator node. " Supporters, however, highlight IOTA's notable partnerships, including work with public authorities like the European Commission and the incorporation of open standards like W3C DIDs and VCs in its identity framework. In 2024, IOTA's identity product, developed in collaboration with partners like walt. id and IDnow, was selected for the European Blockchain Sandbox. Despite its innovative approach, IOTA exemplifies the complex interplay of biometrics and digital identity technologies, underscoring that a singular dominating solution for digital identity is unlikely to emerge, but rather a multifaceted ecosystem of interrelated technologies.