Could Blockchain be the Key to a UK Digital ID?

Digital ID is a hot topic. Is it mandatory? Who would make it? How could the government secure the data?

Last week, Liz Kendall MP, DSIT Secretary of State, confirmed a new UK digital ID would aim to achieve three main goals:

• Improve access to public services;

• Offer people greater security and control over their data;

• Show who has the right to work in the UK.

The adumbrated scheme has received cross-party criticism: with the Conservatives, Liberal Democrats and even some Labour backbenchers opposing it. And yet we know almost no details about the plan.

Whilst we wait for a detailed consultation to be published in the next few months, we explore here some initial concerns and potential solutions.

First, the concerns:

Government overreach

Whilst the digital ID was initially proposed as a solution to stem illegal immigration, there are concerns it will end up being compulsory, with its scope broader than mere right-to-work checks. This week, the Foreign Secretary suggested it would be introduced for children over 13, indicating that digital ID will be used across multiple sectors. There are also concerns the digital ID will ultimately collect more user data than that needed merely for purposes of identification, with some parliamentarians raising concerns about the potential tracking of location or online activity. 

Digital exclusion

Practical challenges abound. Around 20% of the UK population, according to the Good Things Foundation, has no access to a digital device; a digital ID could leave this group cut off from access to employment or vital services. Though the government is still in the first year of its digital inclusion action plan, aimed at addressing such concerns, and has confirmed plans to design the digital ID in an inclusive way, how this will happen — and whether it may force people online — remains uncertain.

Cost

Developing a digital ID will be expensive. With the government looking to reduce spending across the board, there are concerns this is not a good use of money, with estimates suggesting such a system would cost between £1 billion and £2 billion to create — followed by an additional annual cost of £100 million. The government has confirmed the system will be funded within existing spending-review commitments; but previous attempts to introduce a national ID infrastructure have proved daunting, with earlier iterations ultimately abandoned due to political impasse or direct public pressure.

Data security

How can the government secure user data? The digital ID is likely to include personal data such as name, date of birth, and national insurance number; it will also likely provide access to government services like welfare and education. The government proposes building digital ID infrastructure on the GOV.UK One login — a platform already plagued by issues and still falling short of the full security requirements expected by the NSCS security framework. Hacking incidents or other cyber breaches in the UK are occurring with increasing frequency, with serious impacts to businesses and individuals. We can expect data privacy to remain a critical challenge.

Could blockchain offer a simple solution?

Blockchain technology would allow digital ID to be held on a secure and decentralised chain, making it harder for individual user data or the system itself to be breached. It would also give users control over their data and a clear way to manage who has access.

The UK is not alone in looking to introduce a digital ID; indeed, in some ways, the UK is far behind. The majority of European countries already have some form of digital ID, with Estonia touted as a particular success story owing to its system’s inclusivity and ease of access to data.

Bhutan has gone one step further, building its digital ID system on the blockchain. The country’s digital ID scheme has operated nationwide for over two years, aiming to provide independently verifiable identity-related credentials to Bhutan’s more-than-750,000 citizens. The Royal Government of Bhutan last week additionally announced it was moving from Polygon to Ethereum, further strengthening the system’s security and stability.

The system takes advantage of blockchain’s key features to allow for self-sovereign identity (SSI) — where individuals control the information they use to prove their identity to website, services, and applications across the web.

The use of blockchain technology for digital ID is designed to bolster both security and privacy. The immutability and transparency inherent to blockchain make it, in theory, a highly secure identity verification framework. By using a zero-knowledge proof protocol, individuals can verify who they are or prove certain details about themselves without having to share all of their personal data. When applying for a government service or checking into a hotel, for instance, individuals can prove they are above 18, or that they are Bhutanese citizens, without revealing their full date of birth or CID number. In theory, therefore, people can access hospitals, banks, or a wide range of public services with just a secure digital confirmation: making interactions faster, safer, and more private.

What else should the UK consider? 

Legal requirements

Using blockchain for these types of national schemes can conflict with legal requirements such as UK GDPR. Wider security risks, such as identity theft, may also be an issue. For example, a private key could be compromised or stolen, allowing someone else to access personal data. The nature of public-ledger transparency, too, may create its own risks: transactions could be viewed if security protocols are not high enough or properly maintained. The UK government would need to consider how it expects blockchain technology to interact with key pieces of legislation like data protection and cyber security.

Digital Connectivity

This type of blockchain system also demands strong and reliable internet connectivity and power supplies across the country, especially if a broad range of public services are marked for digital integration. Whilst over 99% of Bhutan’s installed capacity comes from hydropower plants, the UK would need to power such digital infrastructure in addition to ensuring the whole UK retains internet connectivity. The UK is currently considering a National Grid upgrade and evaluating the role of fossil fuels vs renewable energy; but a fully digitalised ID system could have wide-ranging consequences on physical, as well as digital, infrastructure.

Commercial partnerships

Since some countries have much more experience in developing and delivering these kinds of systems, the UK might consider partnering with commercial organisations rather than building its own. In August 2025, Bhutan NDI — the organisation behind the nation’s digital ID programme — announced a strategic partnership with iDen2, a leading US-based digital identity platform provider. The resulting project, known as “Phenix”, promises to be an end-to-end digital identity solution to meet all industry standards and future regulatory requirements. It provides a modular digital ID architecture aimed at governments and enterprises: encompassing identity enrolment, verification, authentication, and lifecycle management. A commercial partnership therefore represents one potential route for the UK government to find a compliant and secure digital solution without incurring the costs of building a system from the ground up. And yet, following high-profile incidents involving IT-systems providers, such as the Horizon Post Office scandal, the government will need to undertake significant due diligence.

Conclusion 

Building and implementing the UK’s digital ID scheme will be challenging. New technologies like blockchain can help by securing data usage and storage.  

We look forward to analysing the UK’s upcoming digital ID scheme and to working with clients and industry as it develops. If you have any questions, or thoughts on the potential role of blockchain, please don’t hesitate to contact us!