Self-signed identity means you own a private key. Being a human means you own a body. You can call yourself whatever you want in meatspace. People deal with it. You can sign whatever statements you want in cyberspace. If you need to verify that someone has passed a driving test, then yes you need an authority to issue a certificate (or whatever better tech you choose) saying this private key met these requirements.
There's no inherent problem with the identity being self-signed if you just need a user-id.
On the other hand, a real ID check makes sure with a high degree of certainty that the person is actually the same one who performed other actions (was born, purchased a home, has money, etc.)
So yes, you can have self-signed identity. And you can use it 99% of the time. If you need government-level identity verification, you can build that, do the hard check, and link to a self-signed identity by issuing a certificate for a reasonable amount of time until a re-check is desired. Your drivers license is exactly that in physical form. I'm not saying we shouldn't have a digital DMV that issues digital drivers licenses. I'm saying you don't need that as the foundation of your identity system. Identity is self-sovereign by nature. Don't fight it.
Read up on account abstraction: https://blog.jarrodwatts.com/what-is-account-abstraction-and...
https://twitter.com/DefiIgnas/status/1633626349226319872
> 5/ Account abstraction is a huge breakthrough for crypto self-custody.
> It enables:
> • Create & restore a wallet with an email or a phone number
> • 1-Click transactions
> • App pre-approvals & limits
> • 2FA protection
> and much more.
Do you use Bitcoin and tomorrow Venezuela buys up 51% of global hashing power? Your identity is now managed by Venezuela, have fun