Is Digital Identity only important to a small minority (such as these folks) who have drunk the Cool Aid, or is the Digital Identity cause inevitably going to take over the world at some time? I will try to summarize in this post why I think Digital Identity matters. It turns out there are many, many reasons.

But before I do that, we need to look at the surprisingly many and varied application areas for Digital Identity, and what this new technology can hope to accomplish there:

1. Digital Identity as a security tool. There is no doubt that Digital Identity technology can make computing more secure. Among other things, it can reduce the number of passwords we need to remember (no more yellow stickies on computer monitors), it can handle multi-factor authentication, it can make it much harder for crooks to impersonate others etc.
2. Digital Identity as a compliance enforcement tool. In the aftermath of Enron and with legislation such as Sarbox and HIPAA, many companies feel they need to attach specific policies to their software applications that enforce what specific employees are and aren’t allowed to do. Without Digital Identity technology, that would be next to impossible.
3. Digital Identity as a big-government tool. This is the government equivalent of the corporate compliance enforcement tool. (I will not further talk about this as I’d like to keep politics out of this blog as far as possible).
4. Digital Identity as a convenience or cost-saving tool. Single-sign-on for consumers falls into this category. If, as a consumer, I don’t have to remember dozens of usernames and passwords at various websites, and don’t have to keep track of who I need to send an updated address to, my life will be easier and my on-line experience will be more productive and enjoyable. Similarly, not counting the security benefits, if corporate applications were single-sign-on enabled, employees could be more productive and make better use of the available information technology.
5. Digital Identity as a tool to empower the individual and/or groups of individuals. To me, this is the by far most interesting application of Digital Identity. If you and me could claim our place in cyberspace, just like corporations such as Amazon and eBay claim theirs, we could create a shift in the relative distribution of power from big companies to the individual, with potentially tremendous and tremendously valuable consequences all across society.

[Note: this is my own list, and there's a good chance it's incomplete. If you can think of some things I've missed, I'd appreciate it if you dropped me a note.]

For reasons that I cannot completely understand, the discussion of Digital Identity today largely focuses on the first four of these items. There are the "enterprise digital identity people" (example quotes courtesy of CNet’s Dan Farber) who talk about compliance, identity management, security, policies and so forth. There are the "Digital identity as a convenience" people (such as when A9 uses Amazon account names). And there are the privacy advocates who talk — or rather not talk — about the promise of Digital Identity, or its opposite. But is that all Digital Identity can do?

In my mind, if that is all it can do, it would indeed be boring. After all, most of us won’t get excited about locksmiths (security), a better door knob (convenience) or lawyers and accountants (compliance) either, and attempting to drum up excitement around those themes has always looked quite Quixotic to me …

So let me tell you what excites me about Digital Identity: it is the transformational power that Digital Identity can bring — assuming it is done right — to empower individuals and groups in ways that are highly desirable but impossible without. Or, in plain language: the new products and features that only can be built with Digital Identity and will be built as soon as we have it. And we will never look back.

There are lots of them. I will be talking about many of them on this blog going forward (responding, in part, to a challenge by Kim Cameron), and I hope we all can have a great and exciting discussion around them. To get this started, let me pick out just three of them:

• What Marc Canter calls "Digital Lifestyle Aggregation". In short, technology that brings together all of an individuals devices (from PC over stereo to cell phone and digital camera) and media centered around the individual (rather than … well, not centered around anything but fragmented and all over the place). Why is it that the owner of these devices is responsible for making them all together, instead of the devices coming together to optimally support the individual? That would mean no more "let me think, did I burn this file onto that CD" or "no sorry, I can’t play this song on the big stereo speakers.", it could make podcasting as easy as sending e-mail and have a myriad of interesting applications…
• What we at NetMesh call Situational Software: typically mobile software that is aware of the user’s immediate situation, and proactively supports them in that situation, instead of being just able to offer a bunch of remote websites that are very clueless about the user and thus not very helpful. Situational Software largely depends on having a good Digital Identity foundation, and has lots of applications in a business and private context.
• What Mark Pincus calls the PeopleWeb, which proposes a 180-degree shift in how, for example, we buy and sell items on the web. Instead of browsing stores like Amazon for what they offer to sell, we would instead post on our own sites what we’d like to buy. The idea of a Personal Health Record probably also falls into this category.

Need more convincing? I will keep posting … hope you comment or blog back!