Blockchains are decentralized cloud computers that enforce rules on a historical record. Bitcoin's rules are about managing a currency: how coins are issued, how to transfer them, etc. You can build a blockchain that enforces any rules, though, and Ethereum lets you define new rules without having to spin up your own blockchain.
Your identity will no longer be a key. It will be a pointer to a program and its associated storage on a blockchain. To identify yourself, give someone a proof that you control that identity. To add a new key to the identity, use the rules you put in place to add new keys. To change the rules that control the identity, use the rules you put in place to change the rules. You can build any rules for an identity management process into a program that runs on a blockchain. Through trial and error, we will discover the most resilient patterns with the least trust required.
