You're in multiple computers all connected to the internet. Honestly these days we should all just be able to give the police our names and have them pull up our information. It's the same thing. You'll still get in trouble if the picture doesn't match. The ID could come through in ciphertext and need to be decoded using a secret known only to the person to whom it belongs.
It should be legal to drive without a physical license. We're all stored inside the computer now.
The part of me that likes freedom over safety likes this idea because it gives the government less ability to enforce its own bullshit.