We are going to end up with something sooner or later. The fact is that we want (and can) enter into contracts on the Internet. In order to enforce contracts we must have identities. Since the Government (specifically the judiciary) enforces contracts, this means that we must be entering into these contracts under Government-managed identities. Currently we acquire and prove this Government-managed identity using an…
Also, contract enforcement can occur with out ID, look at bringing suit under a John Doe or Richard Roe.
In the real world we have drivers licenses yet fraud still happens.