I dimly remember some sci-fi book, the kind where everything was Very Crypto-Quantum, and a character was reminiscing about how human spacefaring civilization kinda-collapsed, since the prior regime had been providing irreplaceable functions of authoritative (1) Identity and (2) Timekeeping.
Anyway, yes, basic identity management is an essential state function nowadays, regardless of whether one thinks it should be federal or state within the US.
That said, I would prefer a tech-ecology where we strongly avoid "true identity" except when it is strictly necessary. For example, the average webforum's legitimate needs are more like "not a bot" and "over 18" and "is invested in this account and doesn't consider it a throwaway."
The terrifying thing about this is that phones are almost trivially SIM cloned, surveilled, and impersonated, when they're not just owned with malware.
A breach like Equifax should have cost their shareholders 100% of their shares, if not triggering prosecutions.
We are not doing any of this because we are being led by elderly narcissists who loathe us and rely on corporate power, in both parties, and that fact was felt at a gut level, and enabled fascism to seep right in to the leadership vacuum.