In a world where digital identity is more crucial than ever—whether for logging into your favorite website or app, verifying your age online, or accessing secure services—how your identity is managed truly matters, especially for privacy-conscious Millennials, Zoomers & Gen Alpha (and Baby Boomers should Care to avoid being scammed all the time).
Two dominant approaches stand out in this space: federated and decentralized identity. But one is not necessarily equal to the other. Or should we reconsider that? This article breaks down both systems, explores their pros and cons, and shows how platforms like Google Sign-In, Polygon ID, and Privado ID fit into the bigger picture.
Centralized Identity: The Default in 2025
The reality is that most of us—from Europe to the US—still rely heavily on centralized login and verification tools offered by Big Tech platforms (the so-called GAFAM: Google, Apple, Facebook, Amazon, Microsoft). We’ve come a long way though: From simple POST and GET form-based logins on early forums, to eID smartcards & readers for logging into government portals & banking apps, to the current ubiquity of 2FA (Two-Factor Authentication) and SSO (Single Sign-On) in everyday apps. The driving goal? To combat fraud, identity theft and account takeovers.
Centralized ID systems typically verify your identity through your email address or phone number via your PC, laptop of smartphone, proving that you’re the rightful user behind a device. These systems often rely on standardized protocols to business & private life like
- SAML (Security Assertion Markup Language)
- OAuth 2.0
- OpenID Connect (OIDC)
- WS-Federation
Idea is to verify your identity to indicate it is really you behind a device of choice.
In reality, we call them Centralized Identity-as-a-service (IDaaS) utilizing web2-technologies to verify your identity online
Federated vs Decentralized Identity: What’s the Difference?
What Is Federated Identity?
Federated identity refers to a system where an identity provider (IdP) manages your credentials and allows you to log into multiple services using the same account. But one nuance: Big Tech platforms like Google or Facebook offer centralized identity-as-a-service, not true federated identity. True federation implies cross-domain trust based on shared & central governance, frameworks or open protocols.
📌 Examples:
- Azure AD Federation
- Shibboleth
- eduGAIN
In this setup, the identity provider acts as a middleman. For example, when you log into Spotify using Apple, you’re trusting Apple to vouch for your identity. The upside is convenience—but the downside is centralization and data sharing.
✅Pros:
- Easy to use (one login for many apps)
- Mature and stable
- Widely supported
❌ Cons:
- Data collection and tracking
- Centralized control (what if Google bans you?)
- Vulnerable to breaches of the central IdP
What Is Decentralized Identity?
Decentralized identity (DID) is a new model where users control their own identity, usually stored in a secure digital wallet.
Verification happens via the blockchain, peer-to-peer networks, or other distributed technologies. Many DID systems use Zero-Knowledge Proofs (ZKPs) to confirm identity attributes (like age or citizenship) without revealing sensitive information.
📌 Examples:
- Polygon ID – A decentralized identity protocol on the Polygon blockchain. Lets users prove attributes like age or citizenship without exposing unnecessary data.
- Privado ID – A privacy-first identity solution (non-blockchain) that enables attribute-based authentication with minimal data sharing.
- SpruceID, BrightID, Civic, Concordium and others also fall into this category.
Federated vs Decentralized: Key Differences
Who controls your ID?
- Central provider (e.g. Google, Apple)
- You (via a wallet or agent)
Privacy
- Medium to low (data shared with provider)
- High (selective disclosure via ZKPs)
Censorship-resistant?
- ❌ No – can be banned or restricted
- ✅ Yes – you own your credentials
Ease of use
- ✅ Very high (widely integrated)
- ⚠️ Medium (still improving)
Security risk
- Centralized breach risks
- Wallet/device loss if not backed up
Adoption
- Ubiquitous
- Growing, especially in Web3
Centralized, federated & decentralized digital marketing
Digital marketing today operates along a spectrum from centralized to federated to decentralized models. Centralized ecosystems (Wallet Gardens) —like Google Ads, Meta, or even Discord—keep full control over identity, consent, and auctions, with users relying entirely on the platform’s governance. The next layer is federated systems, where multiple actors interoperate on shared standards but central hubs or vendor registries still exist: examples include OpenRTB auctions, IAB’s TCF, Data cleanrooms like LiveRamp + Habu or InfoSum & federated social platforms like Mastodon (ActivityPub) or Matrix. These reduce data pooling but still rely on vendor-controlled spines or consortium governance. Finally, the emerging vision of decentralized marketing shifts control to the user, using wallet-based identity (BrightID, Civic, SpruceID, Concordium), zero-knowledge proofs, and protocol-first networks like AT Protocol, Lens, or Brave/BAT to let individuals own their identity, consent & data flows. While federated solutions like dataclean rooms, openRTB and TCF represent important transitional steps away from 3rd party cookies to 1st party IDs, true decentralization means the user’s own cryptographic key, not a platform or consortium, becomes the root of trust in digital marketing.
So… Should Federated Get the Same Status?
While federated (or more accurately, centralized OAuth-based) identity systems are mature and convenient, they do not give users real ownership of their identity. They’re efficient but not empowering.
Decentralized identity, on the other hand, offers privacy, control & censorship resistance—features that are becoming essential in a digital world shaped by surveillance capitalism, cybercrime, and AI-driven profiling.
The question shouldn’t be whether federated systems deserve the same status as decentralized ones—But rather: How can we evolve identity infrastructure toward more autonomy, interoperability, and consent?