Providing the basis for a digital identity service is a perfectly valid government function. Allowing its citizens to identify themselves based on THEIR demand to others.
A zero-logging protocol is also appropriate.
SameOldStory - The only question is
quis custodiet ipsos custodes. Quite simply, you are not realistically going to put surveillance technology back into the bag. Cameras become smaller every year.
As discussed in D.Brin,
The Transparent Society back in '98, the only question is who gets to
look through those cameras. I'd prefer city two, myself.