Historic breakthrough! Bhutan integrates national digital identity system into Ethereum: the first large-scale ID on the public chain, but privacy concerns arise.

The Himalayan Kingdom of Bhutan has completed the integration of its National Digital Identity (NDI) platform with the Ethereum Blockchain, becoming the first country in the world to anchor a population-scale identification system on a public network. This system will serve approximately 800,000 citizens of Bhutan, allowing them to verify their identity and access government services through the blockchain platform. Ethereum co-founder Vitalik Buterin and Ethereum Foundation Chair Aya Miyaguchi both attended the launch ceremony. Although this milestone is seen as a step towards a more secure and open digital future, the permanent storage of national identification information on a transparent public chain has also raised profound questions about citizen privacy protection. Furthermore, Bhutan, as a pioneer in the field of Crypto Assets, currently holds over $1.3 billion worth of Bitcoin, ranking as the fifth largest holder of Bitcoin in the world.

The world's first: Bhutan's digital identity system officially "on-chain" Ethereum

Bhutan has recently completed the integration of its national digital identity platform with the Ethereum blockchain, marking a new phase in the application of public blockchain globally—sovereign nation-level identification. This system allows citizens to prove attributes such as age, residence, or citizenship in an encrypted manner without relying on centralized databases.

· Executive Participation and Migration Timeline

The integration launch event received the highest level of attention. Bhutan's Prime Minister Tshering Tobgay and Crown Prince Jigme Namgyel Wangchuk personally attended the event, while Ethereum co-founder Vitalik Buterin and Ethereum Foundation Chair Aya Miyaguchi's presence highlighted the project's importance in the Crypto Assets ecosystem. Miyaguchi described this integration as a "world first" and called it an important step towards a more open and secure digital future.

Bhutan has completed integration with Ethereum, and the full migration plan for all residents' identification credentials will be completed in Q1 2026.

· The Blockchain Exploration Journey of Bhutan

Bhutan's digital identity system was launched in 2023, initially adopting the W3C identity standards and collaborating with Cardano's development team, Input Output Global. The system initially operated on Hyperledger Indy and will migrate to the Polygon network in August 2024.

Crown Prince Jigme Namgyel Wangchuck of Bhutan has become the country's first digital citizen, symbolically launching the nationwide promotion of the program. This integration into Ethereum was led by Bhutan's national digital identity team and the GovTech team, with contributions from members of Bhutan's local crypto community.

The Philosophical Dilemma of Privacy and Transparency

Although anchoring the identification system on a public Blockchain enhances auditability and security, its transparency also brings significant privacy challenges.

Kirill Avery, the founder and CEO of the decentralized network Alien, pointed out the inherent risks of storing national IDs on a public chain like Ethereum. Once credentials exist on-chain, they will be permanently visible. Avery emphasized that digital identity systems need to strike a balance between "verifiable" and "non-traceable," and questioned whether true Self-Sovereign Identity can be achieved on government-monitored infrastructure.

Bhutan's Crypto Strategy: From Happiness Index to Bitcoin Reserves

Bhutan is a country that measures national development by Gross National Happiness rather than traditional economic indicators, which makes its acceptance in the crypto assets field particularly unique. Bhutan has positioned itself as one of the leaders in crypto adoption:

Massive Bitcoin Reserves: Bhutan currently holds 11,286 Bitcoins, worth approximately 1.31 billion USD. This makes it the fifth largest Bitcoin holder in the world, behind the United States, China, the United Kingdom, and Ukraine.

Energy and Mining: These Bitcoins are obtained through mining by utilizing renewable energy produced by the Himalayan hydropower station. Although the holding has decreased from about 13,000 Bitcoins at the end of 2024, its strategic reserve status remains unchanged.

Other Crypto Assets: Bhutan also holds 656 ETH, valued at approximately 2.73 million USD. The country has also met with former Binance CEO Zhao Changpeng and plans to use Bitcoin and Ethereum as strategic reserves in its special administrative region.

Tourism Application: The Bhutan Tourism Council has partnered with Binance Pay to integrate crypto payments in hotels and local services.

For beginners interested in joining this trend, understanding how to buy Bitcoin and Ethereum is the first step into the digital economy. This usually involves choosing a reliable centralized Crypto Assets exchange, completing identification (KYC), binding a payment method, and then making the first purchase. Bhutan's actions demonstrate to the world that Crypto Assets are no longer a niche speculation but a national-level strategic consideration.

Conclusion

Bhutan's integration of the national digital identity platform with Ethereum is a milestone experiment that combines government services with the decentralized characteristics of public Blockchain. This move will undoubtedly stimulate discussions worldwide about the potential of digital identity and Blockchain technology. However, designing this system to ensure that citizens' privacy is not compromised by the transparency of the public chain is the core challenge it faces. Bhutan's bold attempt, along with its substantial Bitcoin reserves, solidifies its position as a pioneer in the Crypto Assets field and foreshadows a future where national-level infrastructure will increasingly merge with decentralized networks.

This article is for informational purposes only and does not constitute any investment advice. The crypto market is highly volatile, and investors should make cautious decisions.