Bhutan Builds National Digital Identity on Ethereum

Bhutan’s journey toward blockchain-based digital identity has been marked by rapid technological evolution. The National Digital Identity program launched in 2023 with a ceremonial registration of His Royal Highness The Gyalsey on Hyperledger, a permissioned blockchain platform commonly used for enterprise pilots. By 2024, the government had transitioned to Polygon, attracted by its lower transaction fees and zero-knowledge proof capabilities that enable identity verification without exposing personal data.

According to Jigme Tenzing, Secretary of the GovTech Agency, the decision to migrate to Ethereum within a year reflects the government’s commitment to security and stability. “Ethereum is one of the most decentralised blockchains in the world, making it virtually impervious to disruption,” Tenzing explained. “This transition cements both the security and stability of our digital identity.” The move signals Bhutan’s confidence in Ethereum’s global security guarantees and unmatched decentralization.

The initiative, confirmed by Ethereum Foundation’s Aya Miyaguchi, represents a fundamental shift in how nations approach digital infrastructure. What began as a symbolic entry into the digital age has evolved into a comprehensive national strategy that positions Bhutan at the forefront of blockchain adoption for public services.

Bhutan’s approach fundamentally reimagines identity management by implementing a Self-Sovereign Identity (SSI) architecture built on Decentralized Identifiers and Verifiable Credentials. Under this model, each citizen will maintain an encrypted wallet accessible via smartphone that stores verified attestations such as birth dates, addresses, and educational records. These credentials are secured through cryptographic proofs, giving citizens direct control over their personal data rather than entrusting it to a central registry.

This decentralized approach addresses critical weaknesses in traditional identity systems. According to World Bank’s ID4D dataset, approximately 850 million people worldwide lack any official form of identification, while another 3.3 billion have no digitally verifiable records. Centralized databases, while common, are expensive to maintain and vulnerable to breaches. In the United States alone, 22% of Americans have been victims of identity theft, with the Federal Trade Commission receiving over 1 million complaints in 2023 resulting in over $10 billion in losses, predominantly affecting elderly citizens.

The economic benefits of Bhutan’s blockchain model are substantial. The World Bank estimates traditional identity programs cost between $5 and $10 per user annually in low-income countries, while Bhutan’s blockchain-based system could reduce this to under $1 per user, depending on transaction fees and validator costs. This represents a potential 80-90% reduction in operational expenses while simultaneously enhancing security and citizen control.

Bhutan’s initiative positions the country as a pioneer in using permissionless blockchain for national-scale public infrastructure. According to Miyaguchi, “This milestone marks not only a national achievement but a global step toward a more open and secure digital future for the long term.” The success of this project could demonstrate that public infrastructure can reliably operate on open, permissionless chains like Ethereum, challenging conventional wisdom about blockchain scalability and governance.

The United Nations Joint Staff Pension Fund recently completed a similar blockchain-based verification system for its 70,000 beneficiaries across 190 countries, achieving striking results including a 40% reduction in paperwork, 95% lower archiving expenses, and almost 100% digital retention among users. Bhutan aims to replicate these efficiencies on a national scale while setting a precedent for other nations considering blockchain-based identity solutions.

Beyond identity management, Bhutan’s experiment could accelerate the tokenization of real-world assets such as land titles, education records, and professional licenses, all of which depend on verifiable identity. Ethereum already dominates this emerging sector, controlling 62% of all tokenized assets including tokenized currencies, commodities, and treasuries according to Token Terminal data. This positions Ethereum as the default settlement layer not just for monetary transactions but for critical metadata and digital credentials.