From Aadhaar to On-Chain ID: Can India Leapfrog into Decentralised Identity?

From Aadhaar to On-Chain ID: Can India Leapfrog into Decentralised Identity? - Blockchain.News

India already runs one of the world’s most used digital ID rails. The question for 2025 isn’t whether Aadhaar works—it clearly does—but whether India can add a privacy-preserving, portable layer based on open credentials without breaking what’s in place.

What India has today (and what it proves)

Aadhaar at scale. UIDAI regularly handles billions of authentications a month—221 crore (2.21 billion) in August 2025, including 18.6 crore face authentications, a year-on-year jump that shows both scale and evolving modalities. These are real, production transactions across welfare, banking, telecom, and more.

Offline and privacy features exist. Aadhaar supports paperless offline e-KYC (a digitally signed XML file or QR code the resident can share) and a secure QR printed on every Aadhaar form for offline identity verification. Residents can also use a Virtual ID (VID)—a temporary, revocable 16-digit number mapped to Aadhaar—to avoid sharing the 12-digit ID. Together, these are important privacy primitives, even if they’re not “decentralised identity” in the technical sense.

Consent rails beyond identity. India’s Data Empowerment and Protection Architecture (DEPA), implemented in finance as the Account Aggregator (AA) framework, gives citizens a way to move their financial data between regulated entities using digitally signed consent artefacts. It’s a techno-legal system: the rules and the software come together so that consent is verifiable and auditable.

Digital documents as a norm. DigiLocker issues and stores government-backed digital documents (licenses, education records, etc.) that agencies and companies can verify online. This mainstreams the idea of verifiable documents for millions of users.

What this proves: India can run national-scale identity and consent infrastructure, including offline modes and privacy features, and it can shift paperwork to verifiable digital documents—all prerequisites for any serious move toward decentralised identity.

What “decentralised identity” would add (and why standards matter)

The decentralised identity stack usually means W3C Verifiable Credentials (VCs) and decentralised identifiers (DIDs): issuers sign credentials; holders keep them; verifiers check cryptographic proofs without calling a central database each time. In May 2025, W3C shipped Verifiable Credentials 2.0 as a formal Recommendation—important because governments and banks prefer standards before adopting new rails.

For India, VCs could enable:

Selective disclosure: sharing “is-over-18” instead of a full ID.
Resilience and offline verification: cryptographic proofs can be checked without an online lookup, complementing Aadhaar’s existing offline QR/ XML.
Issuer plurality: universities, regulators, banks, and ministries can issue credentials that residents present anywhere, not only inside one platform.

None of this requires a cryptocurrency. It does require trust registries, governance frameworks, and clear rules on what counts as KYC when credentials, not identifiers, do the talking.

Is India already moving in that direction?

Pieces are falling into place, even if no single document declares “Aadhaar → decentralised identity” as a government roadmap.

Privacy-preserving features around Aadhaar—QR, offline XML, VID, and even discussions about app-based, QR-only verification—show UIDAI’s willingness to minimise raw Aadhaar exposure at the edge. That aligns with a credentials-over-identifiers philosophy.
DEPA/AA already treats consent as a first-class object and standardises machine-verifiable permissions. That culture translates well to VC-style presentation of proofs rather than blanket data sharing.
Ecosystem momentum on tokenised/programmable finance (from CBDC experiments to tokenised assets in hubs like GIFT City) increases the payoff from portable, verifiable credentials—for KYC, investor accreditation, and eligibility checks—without repeated database hits. (Those are policy trends; the identity tie-in is an inference.)
MOSIP, the open-source identity platform incubated at IIIT-B, isn’t India’s domestic ID, but its open, modular design—adopted by other countries—shows a homegrown capability to build privacy-by-design identity stacks that can work with VCs.

The hard problems before “on-chain ID” becomes normal

Law and liability. Regulators must say which credentials satisfy KYC and who is liable when a verifier relies on a cryptographic proof that later turns out to be revoked or fraudulent. India’s financial sector already solves analogous questions in AA; identity will need equally crisp answers.

Governance and trust lists. If thousands of issuers can mint credentials, who curates the trust registry that verifiers use? Without transparent governance, decentralisation can turn into confusion.

Revocation and recovery. Aadhaar lets a resident regenerate a VID or update records centrally. In a credentials world, holders need wallet recovery and verifiers need revocation status—ideally, without creating new tracking beacons.

Migration path, not a rip-and-replace. Aadhaar authenticates today’s welfare and bank flows. The pragmatic path is credentials that wrap or reference Aadhaar-verified attributes, used at the edge (on device, sometimes offline), while UIDAI remains the authoritative issuer for certain claims.

So—can India leapfrog?

Yes, if “leapfrog” means layering decentralised credentials on top of proven rails rather than abandoning them. India already runs:

a high-throughput ID system with offline verification and privacy features (QR/ XML/ VID),
a consent standard in DEPA/AA, and
a culture of digital documents via DigiLocker.

Add VC 2.0-compliant credentials as a portable, selective-disclosure layer—issued by UIDAI for core attributes and by ministries, regulators, banks and universities for sectoral claims—and India could reduce over-sharing, support offline and cross-border verification, and keep policy control over KYC.

The risk isn’t technical; it’s governance and sequencing. India will need a clear trust-framework for issuers, wallet standards and recovery rules, revocation registries that don’t surveil users, and explicit regulatory recognition that a verified credential is enough for specific use-cases. If those arrive—in the same “public digital infrastructure” spirit that made Aadhaar, UPI and AA work—the leap won’t be from Aadhaar to blockchain, but from ID numbers to portable proofs.

That quieter shift is how India could lead: by making privacy-preserving credentials the default way citizens prove things—online, offline, and across borders—while the heavy machinery of Aadhaar keeps humming in the background.

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