On the plus side, we could repurposed this system to prevent a lot of types of online fraud. You could use a provider to create a online bank account, sign documents, and other things that require identity.
On the negative side, a lot of sites might start requiring it just because they want to know who you are for advertising purposes.
Yeah, from my understanding all your traffic still routes through you home instance. If your home instance is defederated, you lose access. You will need to create another account with someone that does federated with all your chosen instances. Honestly, this is starting to make me wonder if I should spin up a personal instance just so I an federate with who I want without the risk of being defederated due to the actions of other members.