Introduction
Centralized identity systems make onboarding easy but expose users to data breaches, surveillance, and single points of failure. DIDs and VCs flip the model: you hold your identifiers and credentials, while organizations verify cryptographic proofs instead of storing raw personal data.
Core Concepts
- DID: A globally unique identifier you control, typically anchored on a ledger or other tamper-evident system.
- DID Document: Metadata (public keys, service endpoints) that enables secure interactions.
- Verifiable Credential: A tamper-resistant, signed claim about you (e.g., “Over 18,” “Employee at X”).
- Holder / Issuer / Verifier: The three roles in the trust triangle.
How It Works
- Issuance: A trusted issuer signs a credential and gives it to the holder’s wallet.
- Storage: The holder keeps credentials locally or in secure vaults under their control.
- Presentation: The holder presents a proof to a verifier, who checks the issuer’s signature and revocation status.
Selective Disclosure & Privacy
Using techniques like zero-knowledge proofs and presentation exchange, you can prove facts (e.g., age range) without revealing raw data (full birthdate). This reduces data collection and breach liability for businesses.
DID Methods
There are many DID methods (did:key, did:web, did:ion, did:pkh, and more). Each describes how DIDs are created, resolved, and anchored. Choose methods based on portability, ecosystem support, and reliance on external infrastructure.
Wallets & UX
Identity wallets manage keys, credentials, and presentations. The best wallets simplify backup, recovery, and multi-device usage while making privacy decisions legible to non-experts.
Use Cases
Finance & Compliance
- KYC-lite flows with minimal data exposure.
- Reusable risk checks across platforms.
- Portable reputation for on-chain credit.
Work & Education
- Degree and certification proofs.
- Employment verification without HR phone calls.
- Skill badges for gig marketplaces.
Consumer Apps
- Passwordless login and account recovery.
- Age-gated experiences with zero-knowledge.
- Proof of personhood for anti-bot defenses.
Interoperability & Standards
- W3C DID Core defines the data model and operations for DIDs.
- W3C Verifiable Credentials Data Model standardizes credential structure and proofs.
- Emerging profiles (e.g., OpenID for Verifiable Presentations) align identity with existing login flows.
Risks & Limitations
- Key management remains hard for mainstream users.
- Credential revocation lists and correlation risks need careful design.
- Adoption requires network effects among issuers and verifiers.
Designing a Minimal DID Flow
- Pick a DID method and set up an issuer (test or pilot).
- Define credential schemas that match your use case.
- Build a wallet UX for storing and presenting credentials.
- Implement verifier checks: signature, expiration, and revocation.
- Run pilots with privacy-by-default settings and clear consent.
FAQ
Do I need a blockchain? Not always. Some methods use ledgers; others rely on web infrastructure with transparency logs.
Can credentials be revoked? Yes, via registries or lists the verifier consults during proof verification.
What about regulation? DIDs/VCs complement, not replace, local KYC/AML and data protection laws.
Conclusion
DIDs and VCs offer a practical path toward portable, privacy-preserving identity. As standards mature and wallets improve, users will finally be able to prove the right thing to the right party—no more, no less.
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