Decentralized networks now make it such that there need not be a trusted intermediary in a digital system, so digital IDs could theoretically cut the government out entirely.

Similarly, advanced cryptographic methods such as zero-knowledge proofs allow information to be verified without the verifier needing access to the information.

Combining these two characteristics, we can create systems that grant us all the benefits of digital IDs and are resistant to surveillance. In fact, several projects already have protocols and products that operate based on these principles.

Governments, by their very nature, resist privacy and are more than willing to exploit new technologies to surveil citizens. Thus, as more states and localities choose to implement digital ID systems, it is up to the citizens to demand that those systems be built in ways that protect their civil liberties.

The technology exists. All that is left is for it to be implemented.