> either it is recoverable like a password-protected account and therefore anyone who can pass the recovery check can steal that identity,
That is equally true for physical identity documents like passports and various id cards, and yet it isn't nullifying completely the utility of such documents.
To “log in” to a government service in person (i.e. for the person at the desk to accept that you are you for the duration of your appointment), you have to present at least 100 “points” worth of documents attesting to your identity. A passport is 70 points, a driver’s license is 40 points, and various other documents are 25 or 20 points. In practice the most common way by far is showing your passport and drivers license*.
Both your passport (federally issued) and your drivers license (state issued) have an individual biometric authentication process required for them to be valid: they have a photo on them, and the official checks to see that the photo matches your physical appearance.
So an equivalent digital version of this whole process might be: present a Yubikey (federal) security key (passport) with a successful thumbscan (picture matches), and then present another non-Yubikey (state) security key (drivers license) also with a successful thumbscan (picture matches as well). This logs you in for a single session that expires when you leave the page (valid for just the duration of appointment).
By digital standards this is an onerous authentication process, and it only gets you a short-lived session token at a single service/vendor. Clearly, physical identity documents are grappling with this exact same dilemma.
*: Second most common is showing your drivers license, Medicare card, credit card, and a recent utility bill/bank statement - four pieces of attestation!
Real world licenses and ID's have the added secondary (or primary) benefit of enabling greater economic activity. One can leave the country with a passport, drive a car with a drivers license, grasp medical services with a medicare card, ect. These licenses and IDs are an advantage that lift you up in society.
Digital IDs offer the ability to go 'off-grid' and hide in humility and also to be tracked and seen everywhere you go, without public awareness of it. It has the strongest cultural implications in the US, without a clear advantage to foreigners.
An e-commerce license or a software engineer's certificate based on a paper test that you must upkeep every 5 years or so, would be a largely unpopular, but basically effective way of getting just enough identity out of the people who are paying for stuff and making money on the internet to ID them, when required. You would have to show it makes the user more employable and grant them better access to domestic internet services, as part of the benefits of becoming 'vaguely certified'.
Do we really need more online identity though. The five eyes see it all. Personally, I don't want to hide and I don't want to see what everyone's doing. Let's just get on with trading code and making this whole internet work better.
What you quoted was not a conclusion, it was the statement of a problem. Two options for solving the problem were presented very soon afterwards, and there was a claim that both present contradictions which create difficulties. It was very clear.
> yet it isn't nullifying completely the utility of such documents.
I don't think that anyone is claiming the absolute uselessness of any means of identifying anyone for any purpose, so "complete nullification" shouldn't be the standard. The standard should at least be "more benefit than cost."
That is equally true for physical identity documents like passports and various id cards, and yet it isn't nullifying completely the utility of such documents.