The sole reason that Bitcoin works is that peers have a vested interest (money) in doing one of two things: minting new coins, and proving that the ledger is correct. There's a delicate balance struck between regular users and those with vastly more computational power available to them. Bitcoin is structured in such a way that it's more likely that the latter can gain more virtual currency by playing by the same rules as the regular users rather than trying to subvert the system. This leads to the question of how a distributed identity system like this one is going to convince users that it's in their own interest to be "provers" in this system. For Bitcoin (and similar) the answer is obviously monetary, but the paper makes no mention of compensating peers at all.
The paper describes all the machinery, but completely misses out on the reason why anyone would want to devote their resources (CPU, network, electricity) to implementing it.