Key Takeaways:

 

In the age of Web 2.0, most internet users have a unique connection with each online service they use. Platforms like Amazon, Netflix, Facebook, Upwork, Airbnb, and others require new user registrations. This unique connection, established through email addresses and passwords, grants users the flexibility to present varying identities and credentials as the need arises.

Many service providers, especially those offering financial services requiring KYC, have fully integrated the internet into their operations. These providers often use e-KYC, the digital version of KYC, to reduce bureaucracy. As a result, users upload digital copies of their credentials, such as social security cards, driver’s licenses, passports, etc.

In this changing digital landscape, verifiable credentials emerge as a solution to improve trust and security in digital identity management. This guide will explore the concept of verifiable credentials, their functionality, and potential benefits.

What Are Credentials?

 

 

Credentials serve as evidence of an individual’s accomplishments, qualifications, experiences, or other significant aspects of their identity. Common elements found in credentials include:

• Personal Identification: Typically Includes the owner’s name, photo, and ID number.
• Issuing Authority’s Details: Features symbols or logos of the issuing body (e.g., state government symbols).
• Specific Information: Contains details like health insurance information, passport data, driver’s license specifics, etc.
• Method of Acquisition: Indicates how the credential was earned.
• Grades or Ratings: May include academic classifications (e.g., first class honors) or professional awards (e.g., “Top Performer” in a field).
• Constraints or Limitations: Often have validity periods or specific usage terms.

The Need for Reliable Digital Credential Verification

In today’s digital era, organizations from various fields, including healthcare, social media, and employment platforms, are dealing with the challenge of authenticating digital credentials. This task has become increasingly challenging due to the presence of fake credentials, which can lead to significant security issues and fraudulent activities. A 2019 Greenhouse Treatment Center survey underscores this reality, revealing that a considerable number of Americans have either used or own counterfeit identification.

While digitizing credentials has streamlined many organizational processes and reduced the need for manual verification, it also brought about its own set of challenges, notably the rise in counterfeit digital identities. This shift to digital has opened up critical questions around the verification process: How can organizations verify a user’s credentials confidently and accurately? Is there a way to authenticate credentials quickly and directly from the issuer, bypassing traditional, slower methods?

Consider the cases where it’s necessary to confirm a person’s educational background, like a Harvard Business School degree, or health status, such as COVID-19 vaccination. Traditionally, such verifications could involve lengthy and inefficient processes, including phone or email communications with the issuing institutions. This is where the concept of verifiable credentials comes into play. But the question remains: Can verifiable credentials provide a more effective, quick, and reliable means of verifying credentials directly from the issuer? This article aims to dive into the world of verifiable credentials, examining how they work and their potential to transform the landscape of digital credential verification.

What Are Verifiable Credentials?

How Do Verifiable Credentials Work?

Verifiable credentials enable the instant generation and issuance of new credentials, which can then be presented for verification to various organizations or individuals. One of the key benefits of VCs over traditional credential formats is their enhanced privacy features. Users have the option to selectively disclose only the necessary information or claims, thus maintaining control over their personal details.

For instance, in scenarios where proof of educational qualifications is required, instead of submitting a physical or scanned copy of a graduation certificate, users with VCs can provide a simple, verified response – a “Yes” or “No” – to the inquiry. The verifying party, such as an employer or educational institution, can then immediately authenticate this response directly with the issuing entity, like Harvard University, using public key cryptography. This process not only streamlines verification but also upholds the privacy of the individual’s personal information.

What Is a Verifiable Presentation?

Verifiable Presentations are a key component in the world of verifiable credentials, primarily facilitating user interaction with various entities or organizations. They enable users to consolidate data from diverse credentials into a single, secure format while ensuring that the source or origin of these credentials is verifiable. This functionality is beneficial when users need to meet specific information requests from organizations.

The most significant benefit of Verifiable Presentations lies in their capacity for selective information sharing. Consider a scenario where an organization requires certain personal details like name, nationality, education, employment history, and insurance information. Traditionally, providing this information would mean handing over multiple documents, potentially exposing more personal details than necessary. Verifiable Presentations tackle this issue by allowing individuals to handpick only the relevant pieces of information from their various credentials. These selected data points are then compiled into a single, well-structured presentation, digitally signed to maintain both their authenticity and the user’s privacy.

Understanding Digital Signatures

Digital signatures serve as electronic equivalents of handwritten signatures or stamped seals. They enhance transparency, integrity, and the tamper-evident nature of credentials, making them an integral component of verifiable credentials (VCs). Digital signatures are essential to the trust model of the verifiable credential ecosystem. They provide assurance to the verifier that the shared credential or verifiable presentation indeed belongs to the claimed sender.

For instance, when a user combines data from their credentials in a digital wallet to create a verifiable presentation and submits it to an employer, they use two keys: the private key and the public key. The private key, known only to the issuer, is used to encrypt the credential. Meanwhile, the public key enables the verifier or the public to decrypt and verify the issuance of the credentials.

Digital Wallet vs. Digital ID Wallet

 

 

A digital wallet serves as a secure electronic tool that allows users to store payment methods like credit cards, bank account details, and even digital currency. It simplifies online purchases and transactions by quickly providing payment information without the need for manual entry.

On the other hand, a Digital ID Wallet is designed primarily to securely store and manage a user’s digital identity credentials. This can include digital versions of driver’s licenses, insurance cards, membership cards, and other personal identification documents. Enhanced by blockchain technology, digital ID wallets offer a secure means for users to present digital identification during interactions that require identity verification. Issuers can also utilize digital ID wallets to present verifiable credentials. They leverage cryptography and their public keys to ensure authenticity and security.

The Verifiable Credentials Ecosystem

1. Issuer

The issuer is an entity like a school, healthcare center, bank, company, government agency, or even an individual that grants credentials to users. For instance, a university that provides graduation certificates to its students acts as the issuer. Issuers utilize various techniques to establish their credibility and authority to issue credentials.

2. Holder

The holder is the individual or entity that receives credentials from the issuer. In the example above, each student awarded a certificate by the university is a holder. Holders possess the control to decide who has access to their credentials and can withdraw previously granted access. They can keep their credentials in a digital wallet on their device, or store them online or in cloud-based storage for ease of access and sharing.

3. Verifier

The verifier completes the communication circle within the VC ecosystem. When a holder presents their credentials to a verifier who requests verification, the verifier confirms the authenticity of the credentials through cryptographic communication with the issuer. Public-key cryptography enables the verifier to detect alterations, verify validity, or check expiration dates within seconds.

How Are Verifiable Credentials Verified? 

Verifiable credentials are verified through a three-step process: issuance, possession, and verification.

For example, a university (the issuer) digitally signs a diploma and awards it to a graduating student (the holder). The student can then present this diploma to a potential employer (the verifier) as part of their job application.

In the verification stage, the employer refers to a decentralized blockchain database to confirm the diploma’s authenticity. Importantly, the blockchain does not store the verifiable credentials directly. Instead, it records the necessary verification data and keys. The employer authenticates the diploma by matching the public key associated with the certificate to that of the university’s public key. This method allows the employer to:

1. Confirm the university’s authority to issue the diploma.
2. Ensure the diploma’s integrity by verifying it has not been altered.
3. Ascertain that the credential meets specific criteria, such as verifying that the diploma is from a recognized institution like Harvard University.

The Verifiable Credentials Trust Model: A Trustless System

Key Criteria for Verifiers

Here are some additional specifications that a verifier can request to assess the issuer’s competence, authority, or define the required dataset from the holder:

1. The type of credential
2. The format type of the credential
3. The use of specific cryptography
4. The holder’s names (excluding sensitive information like date of birth or address)
5. The holder’s proof of education (excluding specific grades)
6. The holder’s age without additional personal details
7. Credentials issued by a specific U.S. state
8. Credentials issued by a specific country, etc.

What Are the Key Components of Verifiable Credentials?

Verifiable credentials have three key components:

1. Credential Metadata: This includes the credential identifier and any conditional information like terms of use and expiration dates. The issuer encrypts and cryptographically signs this metadata.
2. Claim(s): This tamper-proof component of verifiable credentials contains details about the individual who received the credential. It may include 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.
3. Proof(s): This section encodes information about the issuer of the VC, including proof of authenticity. It shows if the conveyed claims have been tampered with.

The Benefits of Verifiable Credentials

The traditional procedure for issuing and presenting credentials has its flaws. One of these flaws is the purchase and use of fake credentials, as covered by BBC News. Thousands of UK professionals were found in 2018 to have patronized globally unrecognized fake institutions for certificates. For these reasons and many more, verifiable credentials have developed and continue to grow.

Verifiable credentials have emerged as a solution to address the limitations of traditional credential systems. They offer a range of benefits that enhance the efficiency, security, and privacy of credential transfer and verification processes. Let’s explore these advantages:

1. Instant Verification 

Verifiable credentials enable the instant verification of authenticity. Unlike traditional processes that can take hours, days, or even weeks, verifiable credentials allow for quick verification within seconds. This eliminates the delays and uncertainties associated with manual verification methods. The verification process is facilitated through existing digital signature protocols, utilizing public key cryptography.

2. Secure and Tamper-proof

Verifiable credentials employ digital signatures and cryptographic techniques to ensure the security and integrity of the data. The use of public key cryptography makes credentials tamper-evident, protecting them from unauthorized modifications. This provides a high level of assurance that the credentials being presented are genuine and have not been altered.

3. Limited Access and Privacy Protection

Verifiable credentials offer individuals greater control over their personal information. With digital signatures, users can selectively disclose specific facts or claims without revealing additional personal details. This limits access to sensitive information, providing privacy protection. Ultimately, users have the autonomy to decide which information they share. This ensures their privacy while still meeting the requirements of verifiers.

4. Full Ownership and Control 

Verifiable credentials empower individuals with full ownership and control over their credentials. They can securely store their credentials in a digital wallet and choose when and with whom to share them. Additionally, users can also revoke access to their credentials if needed, granting them complete control over their personal information.

6. Ease of Use

Because verifiable credentials are open standards, they are easy to implement by developers and easy to use by end users. The standardized approach allows for seamless integration into various systems and platforms. Users can combine data from multiple credentials to create a verifiable presentation tailored to the specific requirements of verifiers.

7. Interoperability and Compatibility

As previously mentioned, one can easily merge data from VCs for presentation and use in different contexts. When confirming age for a service, an individual can utilize a VC to provide proof of age. Furthermore, combining information from multiple VCs can verify age, nationality, and employment status concurrently. Combining a single VC with another credential can establish an individual’s eligibility for medical services and other purposes. The digital wallet allows you to share only the necessary data. This helps protect sensitive information and restricts access to authorized parties.

To read more about how interoperability is important in digital identity, click here.

The Role of Decentralized Identifiers (DIDs) in Verifiable Credentials 

 

 

Decentralized Identifiers (DIDs) play a crucial role in verifiable credentials. DIDs leverage digital signatures and other web 3.0 components to publicly identify and verify users or entities in a decentralized manner. Decentralized identifiers are unique global identifiers built on decentralized blockchain technology, in contrast to the centralized registries commonly used today.

DIDs serve as a means to establish and prove the identity of entities involved in verifiable credentials. Entities utilize private keys to cryptographically bind their identity to each credential they issue or hold. DIDs provide a unique technology that verifies the identity claims of any entity, whether it’s the issuer, holder, or verifier. Moreover, the verifier can utilize the public key during verification to attest to the authenticity of the verifiable credentials submitted by the holder.

Please click here to learn more about the importance of decentralized identifiers (DIDs) within the World Wide Web Consortium (W3C).

Conclusion

Verifiable credentials offer a range of benefits that enhance the trust, security, and efficiency of credential transfer and verification processes. By leveraging digital signatures, cryptography, and decentralized technologies, they address the limitations of traditional credential systems. Verifiable credentials empower individuals with greater control over their personal information while facilitating seamless and secure verification for organizations. As adoption of verifiable credentials accelerates, they are poised to fundamentally transform identity management and many other sectors.

Identity.com

In the 21st century, verifying a user’s identity and the authenticity of their credentials has become increasingly urgent and crucial. Building on the decentralized ecosystem framework, VCs and DIDs are revolutionizing existing structures and offering new solutions. It’s exciting to see Identity.com playing a role in shaping this desired future as a member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.

The work of Identity.com as a future-oriented company is helping many businesses by giving their customers a hassle-free identity verification process. Identity.com is an open-source ecosystem providing access to on-chain and secure identity verification. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Please refer to our FAQs page for more info about Identity.com and how we can help you with identity verification and general KYC processes.