> Basically, the core problem is digital identities [...] are cheap to create [...] so fraud is easy. The solution could be just to make it "costly" to create new digital identities.

We already use this model in practice. It's why so many services require a phone number verification now - they are hard enough to get en-masse, especially if you block things like Google Voice. They even have a big advantage in that they are comparatively hard to hack, as the SIM card is effectively a weak form of physical security key.

I think the big problems this causes is discussed on HN quite often.