What Are Verifiable Credentials and Their Benefits

Today, the element of trust has become such a rare commodity. Increasing cases relating to identity theft, data breaches, and online fraud have made people want to look for secure and trustworthy ways through which information is verified. Identity theft and fraudulent activities related to this niche have increased at an unimaginable rate. U.S. Federal Trade Commission report states over 2.6 million cases in 2023 alone, pegging the losses at over $10 billion in claims and losses.

As people build bridges across this complex digital world, one innovation has risen to overcome these challenges: Verifiable Credentials (VCs). These are the digital versions of qualifications, identity, or achievements that will redesign the way we establish trust and share information in the digital age.

What Are Verifiable Credentials?

As stated, verifiable credentials are digital representations of information that a verifier can trust to be true. In some ways, they really are like digital copies of physical credentials such as driver's licenses, passports, or degrees. What is unique about them is their cryptographic security and machine-verifiability.

They use advanced cryptographic techniques to ensure the integrity and authenticity of the information they contain, while being tamper-evident and resistant to unauthorized tamping.

VCs operate on a decentralized architecture, which means individuals who hold the VCs have full control over their personal data.

The three key parties involved in this model are:

Issuer: This is a party that can be any organization that creates and issues verifiable credentials. It can be a government agency, college, school, etc.,

Holder: The individual/organization who receives and holds the verifiable credential in their digital wallet.

Verifier: The party that requests and verifies the authenticity of the credential presented by the holder.

This decentralized approach enables a secure, private, and efficient way of storing, sharing and verifying information, while maintaining trust between all parties.

Also Read This Article: Decentralized Identity: Everything You Need to Know About

Advantages of Verifiable Credentials in Real World Applications

Verifiable Credentials offer numerous benefits that make them an attractive solution for businesses seeking to enhance their digital identity verification processes.

Improved Security

The cryptographic nature of VCs makes them secure from tampering and fraud. This reduces the identity fraud factor, thus allowing only genuine credentials.

Privacy Preservation

In contrast to the traditional way, where, for most credentials, more personal information is shared than what is actually needed, VCs will enable an individual to disclose only that part of information that is essential in a particular transaction. For example, when a person needs to confirm their age at any place, a VC can be used to verify their age without revealing other details like birth date and address.

Interoperability

The interoperability of VCs across systems and platforms means a credential issued by one organization can be verified with ease by another, even where they differ in technologies or standards. This feature is helpful during global operations whenever verification needs to cross borders.

Efficiency and Cost Savings

VC automatically performs all verification procedures, saving unnecessary time and money spent on people performing the procedures. For example, healthcare organizations require verification of doctors' credentials, which would be much faster and more secure using the VC profile and will reduce time in hiring processes.

Also Read This: How Decentralized Identity is Changing the World

Data Ownership and Control

VCs attribute ownership to the credential holder, therefore giving them more control over what information they actually reveal and to whom. This will instill trust between parties in a digital transaction.

Improved Customer Experience

VCs make verification processes easy and reduce the data to be shared, hence making life easy for the customer. A business that respects customer privacy while ensuring security develops better relationships with customers.

The Bottom Line

As we continue to move into the digital age, security and efficiency in identity verification have never been in higher demand. In turn, VCs continue to emerge as a rather promising answer to the challenges thrown out by conventional ways of managing identity. Using cryptography and digital signatures, VCs allow one to prove his or her identity and qualifications in a tamper-evident and privacy-preserving manner.

The verifiable credential has a lot of potential for its applications, starting from high-security environments to financial services, ticketing, and healthcare. The more organizations take this technology aboard and develop interoperable frameworks collaboratively, the more we can expect a sea change to percolate in our ways of approaching identity verification.