Verifiable Credentials (VCs) are a foundational component of the Self-Sovereign Identity (SSI) movement, providing a secure and privacy-respecting way to exchange data. A VC is a digital, tamper-proof credential that contains information about an individual or entity and is cryptographically signed by an issuer. It allows a person to prove a claim about themselves (e.g., their age, professional license, or academic degree) without relying on a centralized database or an intermediary.
The Problem with Traditional Credentials
Our current system for verifying credentials is built on a legacy of physical and centralized digital documents. This model is inefficient and vulnerable:
- Physical Documents: Diplomas, passports, and driver’s licenses are easy to lose, forge, or damage.
- Centralized Databases: When you have to prove a credential (e.g., during a background check), the verifier often has to contact the original issuer or a third-party service to confirm the information. This process is slow, costly, and creates a honey pot of personal data.
- Lack of User Control: Users have no control over how their data is shared or used. They must often hand over more information than is necessary for a transaction.
How Verifiable Credentials Work with Blockchain
The W3C (World Wide Web Consortium) has established a standard data model for VCs, which is being widely adopted in the Web3 space. The process involves a “trust triangle” of three parties: the Issuer, the Holder, and the Verifier.
- The Issuer: A trusted entity (like a university, a government agency, or a company) creates a digital credential for a user. The Issuer cryptographically signs this credential with its private key.
- The Holder: The user receives the credential and stores it securely in a digital wallet. This wallet is under the user’s sole control and is not tied to any central server.
- The Verifier: When the user needs to prove a claim, they present the VC to a Verifier (e.g., a potential employer, an airline, or a bank). The Verifier uses the Issuer’s public key, which is stored on a public blockchain, to cryptographically verify that the credential is authentic, hasn’t been tampered with, and was issued by a trusted entity.
The role of the blockchain is crucial here: it acts as a decentralized and immutable public ledger for Decentralized Identifiers (DIDs) and revocation registries. The verifier doesn’t need to contact the issuer directly. Instead, they can simply check the public blockchain to verify the integrity and origin of the credential.
Key Features and Benefits
- Tamper-Proof: Because VCs are cryptographically signed, any attempt to alter the data will invalidate the signature, making fraud and forgery almost impossible.
- Privacy-Preserving: VCs can be combined with privacy-enhancing technologies like Zero-Knowledge Proofs (ZKPs). This allows a user to prove a claim (e.g., that they are over 21) without revealing their full birthdate or any other unnecessary information.
- User Control: The individual has full control over their credentials. They decide which credentials to share, when to share them, and with whom.
- Instant Verification: The verification process is automated and instantaneous, eliminating the need for time-consuming and manual background checks.
- Interoperability: Because VCs are based on an open standard, they can be used and verified across different systems and organizations, eliminating the need for a separate set of credentials for every platform.
Real-World Use Cases
VCs have the potential to revolutionize a wide range of industries:
- Education: A university can issue a VC for a diploma or a certificate. Employers can instantly and securely verify a candidate’s credentials without contacting the university.
- Healthcare: A hospital can issue a VC for a patient’s medical records or a doctor’s medical license. This enables secure and selective sharing of health data while ensuring the authenticity of a healthcare professional’s qualifications.
- Government & Identity: Governments can issue digital VCs for a passport, driver’s license, or national ID. This streamlines travel and other services while giving citizens more control over their personal data.
- Finance: Banks can issue VCs to verify a customer’s identity for Know Your Customer (KYC) compliance, allowing for a more efficient and private onboarding process.
