> Passports require the most paperwork out of anything - your in particular, a birth certificate, a second form of ID including a driver's license, a photo, and $130+$35. The USPS isn't just looking at a face and issuing a passport.

The point is the hardest part of the problem is already solved - which is the physical infrastructure and labor. As for not holding onto physical items, USPS also has little boxes that people can keep their belongings in.