The alternative is corporate monopolist control, which is what is developing right now with OIDC where Google can "digital death penalty" you and lock you out of your life. The biggest realistic risk is this happening "accidentally" because some stupid bot at Google or Microsoft decides you are violating ToS, and since these companies have basically zero tech support it takes you weeks to unlock your account if at all.

I don't actually like governments owning the identity layer, but then again I am of the "necessary evil" school of thought regarding most of what governments do. It's marginally better than having corporate monopolies own it.

I'm a giant fan of decentralized identity, but there are two insanely hard problems with it:

(1) People lose keys, forget passwords, or get them stolen. They also lose or break security key hardware. I've heard stories of people paying people to actually excavate dumps to find lost Bitcoin keys for example.

(2) There's a chicken or egg problem of getting sites to support any decentralized login scheme without a monopolist like Google pushing it, and the latter have no reason to do so since they want to monopolize the identity layer.

Problem (1) is solvable to some extent by having companies that escrow keys for you. Escrowing with them would not be mandatory but they'd offer a "break glass" service for people who are willing to trade a bit of (potential) privacy for it. A good escrowing service would have a terms of service that forbids misuse of your identity.

Problem (2) is probably harder. Big tech will actively refuse to support any system that doesn't hand them a monopoly or at least an oligopoly.

BTW this is one area where cryptocurrency could have found an actual bona fide beneficial use case! But it's not as profitable as running scams and casinos so nobody did it.