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).

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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.

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.

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.

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.

• 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.

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

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

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.

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.

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