The Internet of Things (IoT) paradigm aims to enhance human society and living standards with the vast deployment of smart and autonomous devices, which requires seamless collaboration. The number of connected devices increases daily, introducing identity management requirements for edge IoT devices. Due to IoT devices’ heterogeneity and resource-constrained configuration, traditional identity management systems are not feasible. As a result, identity management for IoT devices is still an open issue. Distributed Ledger Technology (DLT) and blockchain-based security solutions are becoming popular in different application domains. This paper presents a novel DLT-based distributed identity management architecture for edge IoT devices. The model can be adapted with any IoT solution for secure and trustworthy communication between devices. We have comprehensively reviewed popular consensus mechanisms used in DLT implementations and their connection to IoT research, specifically identity management for Edge IoT devices. Our proposed location-based identity management model is generic, distributed, and decentralized. The proposed model is verified using the Scyther formal verification tool for security performance measurement. SPIN model checker is employed for different state verification of our proposed model. The open-source simulation tool FobSim is used for fog and edge/user layer DTL deployment performance analysis. The results and discussion section represents how our proposed decentralized identity management solution should enhance user data privacy and secure and trustworthy communication in IoT.