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Advisory Note
Recently, Meta CEO Mark Zuckerberg demonstrated in captivating detail a working beta version of photorealistic—or rather, video realistic—avatars in the metaverse. Zuckerberg also claims that this technology will begin rolling out this year (2023) and will be at a consumer price point by the end of 2024. Even during the podcast, the conversation with host Lex Fridman turned almost immediately to the ramifications this technology will have on identity, security, and society. This report covers KuppingerCole Analysts’ viewpoints on how the coming metaverse will impact current distributed identity and sovereign identity systems and what new technologies are likely to emerge.

1 Introduction / Executive Summary

Early announcements of metaverse technology (such as Facebook’s announcement of its rebranding as Meta in 2021) got off to a premature start, and so was met with both high interest and skepticism. For most observers, the technology seemed either aimed purely at first-person fantasy games or high-end digital twin simulations. The promise of a photorealistic virtual reality or mixed reality seemed too clumsy, pricy, and unnatural to become a mainstream business tool. But advancements in what Meta calls Pixel Codec Avatars make this technology now seem imminent for use in organizations of all sizes.

In parallel but separate efforts, projects such as the Decentralized Identity Foundation (DIF) and the self-sovereign identity (SSI) movement sought to shape a radically decentralized view of personal identity. These approaches, primarily seeped in blockchain and distributed ledger technologies, foresaw a world where Web3 applications enabled people to own properties on the Internet, including their own identities. While decentralized identities aren’t yet highly adopted, it’s proper timing to question whether and how Web3 and metaverse approaches overlap in their creation and use of identities, resources, and governance.

As amazing as the achievements in AI and metaverse are to this point, the tension between personal and organizational interest has always kept decentralized identities from becoming ubiquitous. Concerns over privacy, security, cost, roles, interoperability, and risk make consensus among users, enterprises, vendors, and governments perpetually intractable.

Yet, KuppingerCole Analysts believe that recent developments in government involvement, technological advancements, and industry decentralization work to promote the adoption of this technology in the near future. This Advisory Note highlights the trends that are driving all parties to a cooperative future heavily reliant on decentralized identity.

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