How Ethereum’s ZK identity could change digital privacy – But at what cost?

• Ethereum is leading the charge on ZK-based identity, aiming to protect privacy.
• However, if one ID corresponds to one person, could it compromise inclusivity on-chain?

What’s pulling institutions into the blockchain space isn’t just decentralization, it’s the architecture behind it all. Yet, one element stands out as the ultimate dealmaker: Privacy. 

Ethereum [ETH], long at the center of Web3 innovation, is doubling down on zero-knowledge (ZK) proofs to deliver this. 

However, if each digital ID is tied to just one person, could that create new risks around tracking, surveillance, or misuse of identity?

Promise and perils of ZK identity systems

Ethereum is helping redefine digital identity through zero-knowledge (ZK) proofs—a technology that lets users prove they’re real, unique individuals without exposing personal information.

Instead of signing in with email or social media accounts and sharing data, users can create private, app-specific IDs that can’t be linked across platforms. This offers a major boost for privacy and is a key reason ZK identity is gaining momentum.

Still, the technology comes with trade-offs. Enforcing a strict one-ID-per-person model could erode the online freedom that pseudonyms have traditionally offered, especially for artists, builders, and activists in Ethereum’s ecosystem.

There are also equity concerns. Identity systems based on government documents or biometrics may exclude people who lack official IDs or who maintain multiple valid ones.

Ultimately, Ethereum isn’t just adopting ZK identity—it’s uniquely positioned to shape how this powerful technology develops.

The identity dilemma: Ethereum’s philosophical choice

Ethereum is at a philosophical crossroads. Some think it should avoid using identity completely and rely on “proof of capital”, like staking tokens, or owning assets to stop spam and fake users.

But this could create a system where wealth equals power—especially in areas like voting—which contradicts Ethereum’s core values. It undermines the principles of decentralization that the network was built on.

Source: CryptoQuant

A better fit for Ethereum might be pluralistic identity. It is letting people have more than one online identity, but adding cost or effort to prevent abuse.  

For instance, someone could use different IDs for work, activism, or creative projects. But creating lots of fake identities would get harder or more expensive, discouraging spam or manipulation.

In that sense, Ethereum isn’t just using ZK identity; it’s helping shape what digital identity could and should be.

The goal isn’t one perfect ID, but systems that protect privacy, give people freedom, and reflect everything blockchain stands for.