I've had similar ideas regarding how US Military ID cards work. The tech enthusiast in me loves the idea of ubiquitous strong 2FA, functioning ID systems that separate "identification" from "authentication" (looking at you, SSNs), etc.

Identity theft would become essentially impossible. Then if it were adopted by things that are fundamentally associated with your real identity (e.g., banks, payment processors, insurance providers, government institutions) then whole classes of phishing scams would become impossible.

Then there are the use cases where it's convenient for the user. Public transit, event admissions, membership cards.

Then there are the use cases where it's convenient for the provider. Alcohol sales, social media, adult content.

... Yeah, that would turn into a dystopia incredibly fast.