By: Iris Su, 1414 Ventures Associate
In the past twelve months, over 56 million Americans have had a new account created for them without their approval. For the past 40 years, the world has been turning its eyes to the digital world, and the scale of how many have their eyes turned is immense. With COVID-19, the world has expedited this digital revolution, relying on more internet usage to do daily and ordinary tasks online. The internet, this digital space, no longer is a place to provide services. It now includes people, things, and services, allowing for a digital identity to form for all those who use this space.
Digital identity, 1414 Venture’s focal point, is defined as the credentials for individuals, entities or objects that get captured, shared, and stored in order to authenticate, verify, and authorize a transaction or interaction. The important part of digital identity is that it encompasses and touches everyone and everything: whether it be opening a bank account, creating an email account, or having systems interacting with each other, digital identities are involved.
The space for digital identity is consistently growing, spanning from traditional identity and access management to esoteric topics such as digital provenance. These five main categories cover 49 different elements of digital identity which 1414 Ventures has identified and created a MarketScape for. These elements also are present in every industry, allowing for exponential growth and opportunities. Currently, the estimated value of the overall market for the digital identity space is valued at $610.6 billion, and it is projected to grow to over $852.7 billion by 2023. These 49 elements and different industries are ones to watch due to the sheer growth rates and value they offer.
For example, by looking at just one element, Self-Sovereign Identity (SSI), which we define as an approach that allows responsibility and control of an entity’s identity to shift back to the user, we see an exceptionally high CAGR of 82.12%. From its value of $100 million in 2020, SSI is projected to grow to $1.1 billion in just four years. With explosive growth rates like these, it’s obvious why SSI would be an evolving element of investment.
Behind this tremendous opportunity and market size, is a deeper story of how digital identity is changing the world and creating opportunities for not only services, but also people and things. Every single interaction whether it be online shopping or collaboration involves digital identity, which is why this is significant. In the emerging data economy, as more people and devices become interconnected, securely and efficiently enabling data flow and exchange is a key underpinning for continued growth.
With the fast turn to the online world paralleled with the growing market size of the digital identity space, many different financial institutions are re-evaluating their digital investments and are funding huge sums of money into businesses focused on protecting and ensuring every individual’s experience online.
Sources:
Third Annual Consumer Digital Identity Report