Blockchains can extend the guarantees of the blockchain only to concepts that can be completely represented on-chain, which basically meant just coins. They don't have to interface with the real world so aren't subject issues at the boundary. At least that's one way of looking at it. As soon as you start trying to represent things that actually exist in the real world authoritatively, it breaks down - because the authoritative representation is actually off chain, i.e reality. In this case your identity is the authoritative representation, not the key you present.