Identity verification has evolved alongside digital and remote services. From e-visits to e-transfers, businesses need secure and efficient ways to confirm people’s identities while still complying with privacy laws and user preferences. From the early days of Identity 1.0 to the advanced technologies that characterize Identity 3.0, identity verification has undergone a massive transformation.
In this blog post, we review the evolution of identity verification. We start with the constraints of Identity 1.0 that inevitably led to the emergence of a more secure, reliable, and flexible approach called Identity 2.0. This shift marked the advent of specialized identity verification (IDV) companies who went on to evolve the algorithms developed by pioneers in biometrics and computer vision, establishing the foundation for a new era of digital identity verification. This is Identity 3.0. Identity 3.0 is all about a paradigm shift toward self-sovereign identity (SSI) and decentralized identity management systems.The essence of Identity 3.0 and the evolution of identity verification is the shift toward a more privacy-centric model where individuals have true ownership over their personal information. It’s aligned with the growing societal demand for privacy, transparency, and control over personal data.
Identity Verification: Identity 1.0 and the Credit Bureau Era
In the early 2000s, the digital landscape was very different from what it’s like today. This period is characterized by the adoption of mobile devices and smartphones, the proliferation of social media, and the introduction of new authentication regulations. The rise of e-commerce was also a key driver of the evolution of identity verification. All these events sparked the development of what we call Identity 1.0, the initial wave of solutions tackling the identity verification challenges of an evolving online world.
The Birth of Digital Identity
Let’s rewind to a time when people’s financial identities were primarily managed by credit bureaus like Experian, Equifax, and TransUnion. These organizations, which still collect, validate, and distribute your personal and financial information, paved the way for the initial steps into digital financial services and digital identity. Credit bureaus created unique financial fingerprints for individuals using credit-related activities and behaviours to sketch a comprehensive financial history. This financial history became a person’s first digital identity, Identity 1.0.
Identity 1.0 laid the groundwork with basic authentication methods such as usernames and passwords. However, these methods were often susceptible to vulnerabilities such as phishing attacks and password breaches, highlighting the limitations of Identity 1.0 in ensuring robust security.
As the adoption of technology accelerated and online transactions became more prevalent, the limitations of relying solely on credit bureaus for identity verification became undeniable. The need for more robust and secure methods of verification emerged, leading to the evolution of identity verification beyond the systems of credit reporting agencies.

The Promise and Perils of Identity 1.0
In Identity 1.0, credit bureaus were the trusted third-party intermediaries controlling and validating people’s financial identities. As we covered, these institutions simplified the lending process by providing a single source of truth for lenders, and they offered some level of fraud protection by monitoring suspicious activities. Yet, this centralized model of digital trust proved to be a double-edged sword.
Centralization led to single points of failure, making the entire verification system vulnerable to data breaches and identity theft. You might remember the infamous Equifax data breach in 2017 as an example of the inherent weakness of centralization.
Aside from the security issues, the Identity 1.0 era struggled with problems related to data transparency and user control. Consumers had little power over who accessed their data and how it was used. In many cases, consumers were left in the dark about who was reviewing their credit information and why.
Identity Verification: Identity 2.0 and the Rise of SaaS IDV Companies
With the rise of cyber threats and the proliferation of online transactions, Identity 2.0 emerged as a response to the shortcomings of its predecessor. This phase witnessed the integration of biometric authentication and two-factor authentication (2FA) into identity verification processes. Biometric data such as fingerprints and facial recognition offered a more secure means of verifying identity, while 2FA added an extra layer of protection by requiring users to provide a secondary form of verification, such as a code sent to their mobile device.
Innovators such as ID R&D, iProov, Regula, and Innovatrics developed and refined pivotal algorithms that underpin contemporary identity verification. By incorporating artificial intelligence (AI) and machine learning into biometric and computer vision technologies, these companies significantly advanced the efficiency, reliability, and security of these systems.
As a leading identity verification company, we also invested in cutting-edge technologies to enhance our identity verification platform, incorporating biometric authentication capabilities and bolstering our security protocols to mitigate emerging threats effectively.
The Rise of SaaS IDV Companies
Building on these foundational technologies, identity-focused software-as-a-service (SaaS) companies like Onfido and Veriff emerged, providing a fresh perspective on identity verification. Initially, they used the core algorithms pioneered by the biometric and computer vision trailblazers, integrating them into more comprehensive, user-friendly platforms. Eventually, many of these SaaS IDV companies began to devise their own technologies, customizing and fine-tuning algorithms to cater to their specific use cases and clientele. By offering scalable and versatile identity verification solutions, these companies contributed significantly to the birth of what we call Identity 2.0.

The Hurdles of Identity 2.0
While Identity 2.0 heralded a significant leap forward, it also introduced its own set of challenges.
Here are the few:
- High User Abandonment – One prevalent issue is high user abandonment. Rigorous verification processes, albeit crucial for security, may be tedious and lengthy, leading users to abandon the process prematurely. Striking a balance between stringent security measures and a seamless user experience remains a critical challenge for identity verification companies even today.
- Spotting Fake Identities – Another pressing concern is detecting fake identities and fraudulent personas. Synthetic identities are crafted by merging real and counterfeit information, and remains a formidable challenge due to the limitations of conventional verification methods. Here’s a blog post on How to Spot Fake IDs.
- Upholding Privacy – The accumulation of personally identifiable information (PII) within IDV systems raises the specter of “PII honeypots.” These “honeypots” are hotspots for hackers, with breaches posing the risk of significant privacy violations and fraud.
Identity Verification: Identity 3.0 – Individual Control
The transition from Identity 1.0 to 2.0 symbolizes substantial progress in digital identity verification. However, the journey is far from over.
As we enter an era where digital identities mirror the reliability and security of physical ones, and replace them in some cases, tackling the challenges of Identity 2.0 listed above is paramount. Fortunately, enhanced user experience curtails abandonment, advanced AI algorithms better detect synthetic identities, and fortified encryption methods secure PII. Unlike previous models that depended on third parties for verification, Identity 3.0 notably focuses on empowering individuals with control over their digital identities.
In the Identity 3.0 landscape, the focus isn’t simply verification and validation, but more profound digital identity themes. Identity 3.0 is characterized by advancements in technology and a shift towards user-centric and decentralized identity management systems. In Identity 3.0, individuals have greater control over their personal data and how it is used, leading to enhanced privacy, security, and interoperability across various online platforms.
These considerations around technology and AI characterizes our identity verification services today.
Characteristics of Identity 3.0
Identity 3.0 represents the latest evolution in the concept of digital identity. Key features of Identity 3.0 include:
- Self-Sovereign Identity (SSI): At the core of Identity 3.0 is the principle of self-sovereign identity (SSI), which empowers individuals to own, control, and manage their identity information without reliance on centralized authorities. With SSI, users can selectively disclose their personal data as needed, maintaining privacy and autonomy in the digital realm.
- Decentralization and Blockchain Technology: Identity 3.0 leverages decentralized technologies, such as blockchain, to create a secure and tamper-proof ledger for storing and verifying identity information. By distributing identity data across a network of nodes, blockchain enhances security and reduces the risk of data breaches or unauthorized access.
- Interoperability and Portability: Identity 3.0 aims to enable seamless interoperability and portability of identity information across different platforms, applications, and services. By adopting open standards and protocols, users can smoothly access and share their identity data across various systems without encountering compatibility issues or barriers.
- Enhanced Security and Privacy: With Identity 3.0, security and privacy are prioritized through the use of cryptographic techniques and advanced authentication mechanisms. Multi-factor authentication, biometric verification, and zero-knowledge proofs are among the methods used to verify identity securely while minimizing the risk of fraud or identity theft.
- User-Centric Design: Identity 3.0 focuses on delivering a user-centric experience, where individuals have intuitive control over their identity data and how it is managed. User-friendly interfaces, consent-based data sharing, and transparency in data practices are essential elements of this approach.
Overall, Identity 3.0 represents a paradigm shift in how digital identity is conceptualized and implemented. By empowering individuals with greater control over their personal data and leveraging decentralized technologies, Identity 3.0 aims to create a more secure, private, and user-centric digital ecosystem.

Reusable Self-Sovereign Identity
Self-sovereign identity (SSI) is a concept in digital identity management that emphasizes individuals’ ownership and control over their own identity data. It enables individuals to assert their identity online without relying on centralized authorities or intermediaries. At its core, self-sovereign identity empowers individuals with the right to manage and share their personal information as they see fit, enhancing privacy, security, and autonomy in the digital realm – they control how, when, and to whom their identity data is revealed.
Key principles of SSI include:
- Ownership: In an SSI system, individuals have full ownership of their identity data, which is stored securely on their own devices or in a personal data vault. This ownership extends to the ability to control how their data is accessed, shared, and used by others.
- Control: SSI gives individuals granular control over their identity information, allowing them to selectively disclose specific attributes or credentials to different parties as needed. This control is facilitated through the use of decentralized technologies such as blockchain and distributed ledger technology (DLT).
- Portability: Self-sovereign identity systems enable the portability of identity credentials across various platforms, services, and applications. Individuals can carry their digital identities with them wherever they go, eliminating the need to create separate accounts or undergo repetitive identity verification processes.
- Interoperability: SSI promotes interoperability by adhering to open standards and protocols, enabling seamless integration with existing identity systems and frameworks. This interoperability facilitates smooth data exchange and collaboration between different parties within the digital ecosystem. There’s no need to create multiple usernames and passwords.
- Privacy: Privacy is a fundamental aspect of self-sovereign identity, with individuals retaining control over their personal data and how it is shared; users decide what information to share and with whom. By minimizing the collection and exposure of unnecessary information, SSI enhances privacy protections and reduces the risk of data breaches or misuse.
Overall, self-sovereign identity represents a paradigm shift in how digital identities are managed and verified. By empowering individuals with greater ownership, control, and privacy over their identity data, SSI offers a more secure, transparent, and user-centric approach to identity management in the digital age.
Certn’s Role in Remote Identity Verification
In conclusion, the evolution of identity verification from Identity 1.0 to Identity 3.0 reflects a profound transformation in how we perceive, manage, and secure our identities in the digital age.
Identity 1.0 laid the groundwork with basic username-password authentication, while Identity 2.0 introduced biometrics and two-factor authentication to enhance security. However, it’s in Identity 3.0 that we’re witnessing a fundamental shift toward user-centric, decentralized, and privacy-enhancing identity solutions. With self-sovereign identity, blockchain technology, and a focus on interoperability and security, Identity 3.0 represents a bold leap forward in empowering individuals with greater control over their personal data while fostering trust and innovation in the digital ecosystem.
As we reflect on the evolution from Identity 1.0 to 3.0, one thing remains clear: the identity verification landscape is continuously evolving. As a leading background screening and identity verification company, we’re proud to be at the forefront of this transformative journey, empowering businesses to navigate the complexities of identity verification with confidence and flexibility. Whether it’s harnessing the power of AI and machine learning or exploring new frontiers in decentralized identity, such as our vision for a verifiable credentials network, we’re dedicated to providing cutting-edge solutions that enable businesses to verify identities securely, efficiently, and responsibly in an ever-changing digital world.
Certn’s digital identity verification services, powered by Trustmatic’s ID product leadership, is motivated to build on these experiences; to drive the digital identity evolution forward and create an Identity 3.0 that’s user-focused, transparent, secure, and decentralized. It’s a future we should all look forward to and actively work toward.
Interested in seeing us in action? Talk to an expert via our identity verification service page.