As the digital world continues to expand, the need for secure, privacy-focused ways to verify identity and personal information is growing. In traditional digital identity systems, individuals are often required to provide more personal information than necessary, increasing the risk of data breaches, identity theft, and privacy violations. Verifiable Credentials (VCs), a core component of decentralized identity systems, offer a solution by allowing individuals to prove specific claims about themselves—such as age, nationality, or qualifications—without revealing unnecessary personal data.
In this article, we’ll explore what Verifiable Credentials are, how they work, and why they represent the future of trust and privacy in digital identity management.
What Are Verifiable Credentials (VCs)?
Verifiable Credentials (VCs) are digital representations of claims made by an individual, organization, or entity, which can be cryptographically verified by a third party. These credentials can be used to prove certain aspects of a person’s identity, such as age, education, or employment, without exposing sensitive or unnecessary personal data.
The concept of VCs is based on standards developed by the World Wide Web Consortium (W3C), which ensures that these credentials can be trusted and used across various platforms and industries.
In a Verifiable Credential system:
• Issuer: A trusted entity (e.g., a university, government, or employer) issues a credential to the user, such as a diploma or proof of age.
• Holder: The individual holds their credentials in a secure digital wallet and controls when and how they share this information.
• Verifier: A third party (e.g., an employer or service provider) can verify the authenticity of the credential without needing access to the individual’s full personal data.
By using VCs, individuals can selectively disclose only the information necessary for a given interaction, ensuring privacy and reducing the risk of personal data being misused.
How Verifiable Credentials Work in Decentralized Identity Systems
Verifiable Credentials are a key component of decentralized identity (DID) systems, which allow individuals to control their digital identities without relying on centralized authorities or databases. Here’s how VCs function within a DID system:
1. Issuance of Verifiable Credentials
An issuer (such as a university or government agency) issues a Verifiable Credential to the individual. This credential is cryptographically signed and stored securely in the individual’s digital wallet. The individual now holds proof of a certain attribute (such as their degree or age) that can be shared with others.
2. User Control Over Data
The individual (also known as the holder) has full control over their credentials. They can choose when and with whom to share specific credentials, ensuring that they only disclose the information necessary for a given interaction. For example, a user may want to prove they are over 18 years old without sharing their birthdate or other personal information.
3. Verifying the Credential
When the user shares a Verifiable Credential with a verifier (such as an employer or service provider), the verifier can cryptographically check the authenticity of the credential without accessing the individual’s personal data. This verification process is secure, fast, and privacy-focused, reducing the risk of identity theft or data breaches.
By leveraging Verifiable Credentials within a decentralized identity system, individuals can trust that their personal data is protected, while verifiers can be confident that the information they receive is accurate and authentic.
Why Verifiable Credentials Matter for Privacy and Trust
Verifiable Credentials address many of the privacy and security challenges associated with traditional identity verification methods. Here’s why VCs are a game-changer for digital identity:
1. Enhanced Privacy
In traditional identity systems, users are often required to provide excessive amounts of personal information to verify a simple fact. For example, proving your age might require sharing your entire birthdate and other identifying details. Verifiable Credentials allow individuals to share only the specific information needed (such as proof that they are over 18) without revealing additional personal data, thus enhancing privacy and reducing the risk of overexposure.
2. Improved Security
Since VCs are cryptographically signed and stored in the user’s control, they are highly secure and less prone to tampering or fraud. Verifiers can check the authenticity of the credentials without needing access to the underlying personal data, reducing the risk of data breaches and identity theft.
3. User Control and Consent
One of the key principles of decentralized identity systems is giving individuals full control over their personal data. With VCs, users can decide when, where, and with whom they share their credentials. This ensures that personal information is only disclosed with the user’s explicit consent, aligning with global data protection laws like GDPR and Indonesia’s Personal Data Protection Law (UU PDP).
4. Interoperability Across Platforms
Because Verifiable Credentials are built on W3C standards, they can be used across different platforms and industries. Whether you’re proving your identity to access financial services, healthcare, or government programs, VCs offer a universal and trusted way to verify claims securely.
Real-World Applications of Verifiable Credentials
Verifiable Credentials are already being used in various industries to enhance privacy, security, and trust:
• Education: Universities can issue Verifiable Credentials for diplomas and degrees, allowing graduates to share their qualifications with employers without having to provide additional personal information.
• Healthcare: Patients can use VCs to prove their eligibility for medical services or insurance without disclosing unnecessary health information.
• Government Services: Governments can issue Verifiable Credentials for digital identities, enabling citizens to access public services securely while maintaining control over their personal data.
How Baliola’s Mandala Application Chain Powers Verifiable Credentials
For organizations looking to implement Verifiable Credentials within their digital identity systems, Baliola’s Mandala Application Chain provides a robust and scalable solution. As a blockchain-as-a-service (BaaS) platform, Mandala Application Chain powers decentralized identity systems, such as IDCHAIN, developed for PANDI (Pengelola Nama Domain Internet Indonesia).
Baliola’s Mandala Application Chain enables:
• Secure issuance and storage of Verifiable Credentials: Organizations can issue cryptographically signed credentials that are securely stored in the user’s digital wallet.
• User control and consent management: Individuals can manage their credentials, choosing when and with whom to share their information, ensuring compliance with global data protection laws.
• Scalability and interoperability: Built on W3C standards, Mandala Application Chain ensures that Verifiable Credentials are interoperable across different platforms and industries.
By using Baliola’s Mandala Application Chain, organizations can build trust with their users while ensuring that personal data is protected and managed securely.
Looking to Implement Verifiable Credentials?
If your organization is interested in enhancing privacy and trust through Verifiable Credentials, Baliola can help. Our Mandala Application Chain provides the secure, scalable infrastructure needed to implement Verifiable Credentials in decentralized identity systems like IDCHAIN. Contact Baliola today to learn more about how we can support your digital identity initiatives.
