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What is a Verifiable Credential (VC)?

Blog-Post-Author

Max

Created: June 6, 2025

Updated: July 18, 2025


What is a Verifiable Credential (VC)?#

A Verifiable Credential (VC) is a cryptographically secure, digitally issued credential that allows individuals or entities to prove their identity or other attributes online in a privacy-preserving way. Defined by the W3C Verifiable Credentials standard, a VC is designed to be easily shared, verified, and trusted without relying on centralized databases or intermediaries.

Key Characteristics:

  • Cryptographically secure: Leveraging cryptographic methods to ensure authenticity and integrity.
  • Privacy-focused: Users have full control over their credentials and can selectively disclose attributes.
  • Interoperable: Built upon the widely adopted Verifiable Credentials data model v1.1, allowing seamless integration across platforms.
  • Decentralized: Eliminates dependence on central authorities by utilizing decentralized identifiers (DIDs).

Key Takeaways:

  • A Verifiable Credential securely proves digital identity or attributes.
  • It follows the Verifiable Credentials data model v1.1 specified by W3C.
  • Supports decentralized, user-controlled identity management.
  • Enables secure, privacy-preserving digital interactions.

Understanding the Verifiable Credentials Ecosystem#

The Verifiable Credentials ecosystem comprises issuers, holders (usually via a Verifiable Credentials wallet), and verifiers. Each role interacts securely and privately:

  • Issuers: Entities that perform Verifiable Credentials issuance, such as governments, educational institutions, or businesses.
  • Holders: Individuals or entities storing credentials securely, typically within a digital wallet.
  • Verifiers: Entities that perform Verifiable Credential verification to validate authenticity and accuracy without contacting the original issuer.

Benefits of Using Verifiable Credentials (VCs)#

VCs offer substantial benefits to users, issuers, and verifiers:

  • Enhanced Security: Tamper-proof cryptographic signatures eliminate fraud and forgery risks.
  • Improved Privacy: Users have control over their data, deciding precisely what to share and with whom.
  • Efficiency and Cost Savings: Streamlined verification processes significantly reduce administrative overhead and associated costs.
  • Interoperability: Standardized digital credentials that can be easily recognized and verified across borders and sectors.

Verifiable Credentials Data Model v1.1#

The Verifiable Credentials data model v1.1, standardized by the W3C, defines the structure and processing rules for credentials:

  • Issuer identity: Cryptographically linked to the credential to ensure authenticity.
  • Subject details: Information about the holder, such as personal attributes or professional qualifications.
  • Proof of authenticity: Typically, digital signatures using cryptographic algorithms.

Digital Credentials vs. Verifiable Credentials#

While digital credentials broadly refer to any digital representation of identity or achievements, Verifiable Credentials vs. digital credentials highlights a key difference: Verifiable Credentials are cryptographically verifiable without centralized databases, whereas traditional digital credentials may lack such robust verification mechanisms.

Practical Implementations#

  • Microsoft Verifiable Credentials: Microsoft’s Azure AD Verifiable Credentials service simplifies the issuance and verification of credentials, leveraging blockchain technology to ensure security and decentralization.
  • VCS Credentialing: Various credentialing services (VCS) implement the Verifiable Credentials specification, enabling institutions to streamline verification processes securely.
  • Verifiable Credentials Java Libraries: Open-source libraries in Java simplify the integration of Verifiable Credentials into existing applications, promoting wider adoption.

Cryptographically Verifiable Credentials#

A cryptographically verifiable credential ensures that the information provided is tamper-proof and trustworthy. This cryptographic layer distinguishes Verifiable Credentials from standard digital credentials, making them ideal for sensitive applications like finance, healthcare, and government services.

Verifiable Credential FAQs#

What are Verifiable digital credentials?#

Verifiable digital credentials are digitally signed documents that cryptographically confirm an individual’s identity or specific attributes without relying on centralized databases.

How does a Verifiable Credentials wallet work?#

A Verifiable Credentials wallet securely stores digital credentials on devices, allowing users to manage, selectively share, and present credentials for verification purposes.

What is Verifiable Credentials issuance?#

Issuance is the process by which trusted entities, such as institutions or governments, create and digitally sign Verifiable Credentials to confirm specific attributes or identities.

What is Verifiable Credential verification?#

Verification is the cryptographic validation process used by third parties to ensure that a presented credential is authentic, unchanged, and issued by a legitimate issuer.

How does Microsoft support Verifiable Credentials?#

Microsoft provides Azure AD Verifiable Credentials, a service allowing organizations to issue and verify credentials seamlessly, integrating decentralized identity solutions into enterprise environments.

Learn more about our enterprise-grade passkey solution.

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