The history of proving one’s identity with official documentation dates back 600 years to the realm of King Henry V in England. Prior to that, your name and local reputation was pretty much all you needed to prove who you were. The Safe Conducts Act of 1414 created the first documentation for the English to prove themselves as subjects of the king when outside England: Thus, the creation of the first official passport.
Surprisingly little has changed since then, at least in the U.S.: Your driver’s license is the default proof of identity for everything from flying domestically to buying a new house. For transactions over the phone or internet, we rely on publicly available information to verify identity (name, address, where you went to high school). If we really want to be secure, we rely on our Social Security number, nine digits that were assigned to