I personally view this development in the light of Bluesky's (currently proprietary) implementation of distributed identities (DID). "Block is contributing foundational components developed under the Web5 umbrella to the Decentralized Identity Foundation (DIF). For the past several years, Block has been developing a number of open source components to push decentralized identity... This contribution includes open source repositories for Decentralized Identity (including the did:dht DID method), Verifiable Credentials, and Decentralized Web Nodes (DWNs)."
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