Web3 is based on the premise that each internet user will have a unique internet identifier, like an email address, that can be natively linked to any piece of software and stored on a blockchain. As part of someone's "decentralized identity," a portion of a person's online activity would then be "on the chain," meaning that it would be public and easily searchable via their individual crypto wallet.

Identity Management Issue

With such a decentralized identity — a readable history unique to each person — one's crypto wallet would function as a sort of profile, similar to Facebook or LinkedIn. But unlike web2 profiles, decentralized identities are backed by hard evidence: a permanent, timestamped record of a person's accomplishments, contributions, interests, and activities to date.

If decentralized identity were widely adopted, people could carry their whole selves with them as they traverse cyberspace: their affinities and experiences are reflected by what they've created, contributed to, earned, and owned online, no matter the specific platform. Moreover, it would bring us closer to how things work in the physical world, where our possessions and reputations are attached to us rather than to the spaces we occupy; we can take them with us and use them however we please.

While it might sound far-fetched today, a real opportunity is leveraging an on-chain reputation for off-chain uses. In the creator economy, for instance, we might see a web3 version of YouTube where the videos don't belong to the platform but to the creator. So the creator could bring their videos to any online space and reap any value tied to those assets. Likewise, on-chain data could be used to gauge engagement or interest in specific creators or brands. A music artist, for example, could quickly identify their top fans based on platform-agnostic, on-chain interactions and reward them with exclusive access or other perks. Finally, decentralized identity could enable an internet-native credit score in the financial realm, which might have applications for issuing loans, performing tenant checks, establishing credit, and beyond.

Decentralized Identity

Suppose decentralized identity is the future of the web. In that case, the contributions you accumulate in your crypto wallet — the articles you write, the content you curate, or the things you buy — will become significant. They'll become the carrier signals of who you are online and the basis for your reputation.

But to mainstream decentralized identity, we must first establish systems that map people's relevant off-chain experiences and affiliations on-chain. Then we must build mechanisms to standardize, process, and prioritize the influx of data that will be added on-chain. On the way, we'll need to solve endemic challenges to decentralized identity, including the lack of context around on-chain records and issues around gaining access to the decentralized web.

From there, we can start to explore the many use cases enabled by factoring on-chain reputation into offline activities based on the openly queryable nature of decentralized identities.

NFT as Decentralised Identity (DID)

Non-fungible tokens (NFTs) have the potential to play an essential role in the development of a decentralized infrastructure due to their technical and fundamental properties. Every NFT contains a one-of-a-kind digital signature that any other NFT cannot replicate. With the help of NFTs, digital identity credentials can be established that are non-fungible in nature and, therefore, cannot be duplicated. These NFT-based credentials can now be used to create profiles and transact with others.

The concept of the Living Avatar NFT brings together the ideas of identity verification and NFTs. Participants on the MetaProof Platform (previously the POI platform) can custom-mint their NFTs, which can then be used as an avatar that is unique and cannot be duplicated.

Living Avatar NFTs, on the other hand, are more than just one-of-a-kind avatars. Users also can insert extra personalized information on these NFTs, which helps to distinguish them further. Therefore, a participant on the MetaProof Platform with a unique Living Avatar NFT will be able to use it to prove specific characteristics about themselves. The proposed concept can alter how identity is managed in Web2.

Your Reputation in Web3

While Web2 reputation was based on content creation for a digital platform, Web3 introduces a concept we're familiar with in real life—a reputation based on participation. As a result, community members can not only invest in various cryptocurrency protocols but also become active participants in DeFi and NFT communities, build dApps, contribute to a DAO, or even earn POAPs (Proof of Attendance Protocol) to register event attendance. As a result, online reputation and digitally-native credentials can finally resemble those of the real world.

Conclusion

Identity and reputation are important problems to work on. They turn protocols from one-off games to iterated ones. Moreover, they are a necessary building block for many blockchain applications like sampling, pricing strategies, governance, lending, security tokens, and airdrops.

The emerging reputation and identity space in crypto is highly exciting, and many interesting developments are coming to market in the next few months and years. What's really neat is that many of these vectors of reputation are composable with each other and can be remixed as APIs. It's something that hasn't really been achievable in Web2.