Is this something that can be integrated with Nostr, or are we expected to start from scratch with a new identity key set?

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No idea. Doesn’t sound like it, but I’m nowhere near smart enough to answer that

IMO it’s interoperable. Block is working on identity wallet constructs with the belief that users will own many decentralized identities.

To be frank, big tech trails not too far behind with device passkeys. It’s using a similar public/private key combination with private relays.

I believe the big difference architecturally is that web5 is a mesh-like construct.