Digital Identities of Tomorrow: The Emergence of Verifiable Credentials
In the digital age, securing and verifying identity has become a paramount concern. The solution lies in Verifiable Credentials (VCs) and Decentralized Identifiers (DIDs), two revolutionary technologies that are transforming the way we authenticate and verify digital identities.
Verifiable Credentials are cryptographically secured digital credentials, designed for instant and secure verification. They are built with interoperability in mind, enabling seamless verification across multiple platforms and services. The trust model for VCs operates on a principle that eliminates the need for extensive communication or permissions, creating a "trustless" environment.
Decentralized Identifiers play a foundational role in the Verifiable Credentials ecosystem. DIDs provide a secure, decentralized, and user-controlled digital identity layer that enables trust and privacy-preserving verification without relying on centralized authorities.
DIDs offer several key benefits. They are self-sovereign, meaning they are created and controlled entirely by the individual or entity, independent of any centralized organization or government. This ownership enables users to manage their own identifiers and credentials without intermediary control or revocation by third parties.
A DID is a globally unique identifier anchored on decentralized networks like blockchains or distributed ledgers, linked to a DID Document containing public keys and service endpoints. This allows verifiers to authenticate the holder’s identity or credentials cryptographically, establishing trust in a decentralized fashion.
DIDs also support a new trust model through decentralized public key infrastructure (DPKI), where public/private key pairs replace passwords and centralized registries, improving security and user privacy while enabling encrypted communication channels relevant to credential interactions.
In the Verifiable Credentials model, three main roles exist—issuers (who issue credentials), holders (who possess them), and verifiers (who verify claims). DIDs enable each party to identify themselves securely and interact without centralized databases, facilitating issuance, presentation, and verification of credentials.
VCs allow individuals to share only necessary information, protecting privacy by limiting personal data exposure. Proofs encode information about the issuer of the VC, including proof of authenticity and whether the conveyed claims have been tampered with. Verifiable Presentations enable selective data sharing, allowing individuals to consolidate and share only relevant information from their credentials.
Verifiable credentials have three key components: credential metadata, claims, and proofs. Credential metadata includes the credential identifier and any conditional information like terms of use and expiration dates, signed cryptographically by the issuer. Claims contain details about the individual who received the credential, such as claims, awards, achievements, job titles, employee numbers, courses of study, graduation grades, date of birth, nationality, and other relevant information related to the purpose of the credential.
Any entity—whether a person, organization, or IoT device—can act as an issuer, holder, or verifier within the verifiable credentials ecosystem. Digital signatures play a critical role in verifying credentials, ensuring data authenticity, preventing tampering, and building trust between parties. Digital ID wallets are secure apps that store and manage verifiable credentials, using encryption, biometrics, and cryptographic techniques to ensure security and privacy.
The World Wide Web Consortium (W3C) has played a pivotal role in the development of Verifiable Credentials, establishing open standards for their interoperability, security, and privacy. The global market for digital identity solutions, including verifiable credentials, is projected to grow from $13.7 billion in 2020 to $30.5 billion by 2025, with a Compound Annual Growth Rate (CAGR) of 17.3%.
Our website is an open-source ecosystem providing access to on-chain and secure verification, improving the user experience and reducing onboarding friction through reusable and interoperable Gateway Passes. Verifiers can specify additional criteria to assess the issuer's competence and authority or to define the required dataset from the holder, such as the type of credential, holder's name, or credentials issued by a specific country.
In summary, DIDs serve as the decentralized digital "identifiers" that anchor and authenticate verifiable credentials, enabling a decentralization of identity management that enhances privacy, security, user control, and interoperable trust frameworks essential for the ecosystem to function without centralized intermediaries. The adoption of verifiable credentials is on the rise, with benefits including instant verification, security and tamper-proof features, limited access and privacy protection, full ownership and control, ease of use, interoperability and compatibility, and they are being adopted in various sectors like healthcare, education, finance, and government.
In the realm of education-and-self-development, verifiable credentials offer a secure and self-sovereign means for individuals to share their academic achievements, such as course completion certificates, grades, and diplomas, without the fear of data breaches or intermediary control.
Finance, too, can benefit from the adoption of verifiable credentials, as financial institutions can utilize these technologies to verify the identity and creditworthiness of potential clients in a secure, decentralized, and trustless manner, thereby streamlining the onboarding process and reducing the risk of fraud.
