Blockchains and public key cryptography have done wonders for building a new decentralized financial infrastructure free of the centralized middle men and institutional gatekeepers that have abused your trust for so long. You now have a way to exchange value in whatever way you see fit. But with whom? This question betrays a new problem space. As we see the benefits of disintermediation in financial systems, there is a similarly burgeoning demand for new identity infrastructure that can discard the pitfalls of centralized control. Not of how we exchange value, but with whom.
While early Bitcoin saw the beginning of this trend, with public keys being provably linked to some entity that controls the private keys (see: all the calls for Craig Wright to prove he is Satoshi by signing a message with Satoshi's private keys), it is really with Ethereum's account model that we see people beginning to identify with their keypairs (see: any number of Ox... twitter accounts). And of course with the advent of Non-Fungible Tokens (NFTs), this bonding with a digital identifier has become increasingly common (see: the Apes and the Miladies). There are even Ethereum Improvement Protocols in the works to enable more strict linkages between NFTs and on-chain accounts (see: EIP-6551 Token Bound Accounts). And of course there are extensive technical definitions for decentralized identifiers (DIDs), and their associated implementations.
But as the question of "can I control a digital identifier that is truly mine?" gets answered with a resounding 'yes!' the follow-up question becomes, "What do I do with this newfound sovereign digital identifier?" Inevitably people are interested in 'monetization' or other mechanisms of value accrual, but before we get to that question, it is worth addressing the broadest possible answer: 'the same thing you do with your sovereign physical identity.'
What do you want to do as your analog self? Probably something along the lines of:
Your identity is not a just a owner of 'lowest common denominator' of cryptographic tokens or financialized assets about which there is global consensus, but something which understands that, as Alan Watts put it, "existence is relationship."
An identity is something that holds differential meaning depending on the perspective from which it is viewed based on its history of interactions with other identities.
This offers a layer of complexity for those who wish for on-chain assets alone to be an 'identity'. Namely that any interaction between identifiers is extremely costly and needs to pay the price of global consensus. This is obviously undesirable, but the emergent alternative isn't much better: using decentralized identifiers (.eth domains, ethereum addresses, etc) as authentication tokens to interaction channels controlled by centralized entities and service providers. Sure, you save on cost and get an improved UX, but the increased sovereignty you imagine is performative. At any moment your interactions could cease, your history could be erased, and your identifier could lose it's credibility.
In order to have a self-sovereign digital identity, you need a technology stack that gives you control over not just your identifier, but over your interactions as well. That's Urbit.