What is Decentralized Identity?
Decentralized Identity (DID) is a framework for self-sovereign digital identity where the identity holder controls their own identifier and associated credentials — without dependence on a central authority like a government, company, or platform.
WHY IT MATTERS
Traditional digital identities are centralized — Google, Apple, or government agencies control your identity. If they revoke access or their service goes down, you lose your identity. DIDs give identity control to the holder.
A DID is a globally unique identifier (like did:ethr:0x1234...) that resolves to a DID Document containing public keys and service endpoints. The holder controls the DID through their private key, and can present verifiable credentials issued by trusted parties.
For AI agents, DIDs provide decentralized, verifiable identities. Each agent can have its own DID, accumulate credentials (audits, certifications, reputation), and prove its identity to services and other agents — without any central identity provider.
HOW POLICYLAYER USES THIS
PolicyLayer ties spending policies to decentralized agent identities. Each agent's DID maps to specific spending rules and authority levels, creating a portable financial identity that persists across platforms and providers.