Verifiable Credentials and Their Use Cases

Credentials are the backbone of our social and professional lives, verifying our achievements, qualifications, and identities. However, traditional credential systems come with limitations. Physical credentials can be lost, stolen, or forged, while digital versions often lack security features to prevent tampering.

Verifiable credentials (VCs) are revolutionizing how we establish trust, manage identities, and authenticate information online. Unlike traditional credentials, VCs are cryptographically secure, tamper-evident, and verifiable without needing to contact the issuing authority. This empowers individuals with control over their data and streamlines verification processes across various sectors.

Understanding the Verifiable Credential Ecosystem

The verifiable credential ecosystem involves three key players:

• Issuers: Organizations authorized to create and issue credentials, such as government agencies, educational institutions, or professional associations.
• Holders: Individuals or entities receiving and holding credentials, who are the subject of the information within the credential.
• Verifiers: Parties that check the authenticity and validity of the information in a holder’s credentials.

Physical vs. Digital Credentials

Credentials can come in various formats and may utilize different authentication methods. They can also differ in terms of portability and accessibility. Broadly speaking, credentials are classified into two categories:

Physical Credentials: These are tangible documents that can be physically handled, such as a paper certificate or an ID card.

Digital Credentials: These are in electronic format and can be stored and shared digitally.

Verifiable credentials fall under the category of digital credentials. However, what sets them apart is that they are cryptographically secure, making them tamper-evident, and can be verified for authenticity without the need to contact the issuing authority. This adds an additional layer of trust and security to the credential.

What Are Verifiable Credentials? 

Verifiable credentials (VCs) are digital credentials that are cryptographically signed, shared, and verified in a secure and tamper-evident manner. They utilize decentralized and cryptographic technologies to enable individuals and organizations to manage and share their credentials and personal information with others while maintaining privacy and control. VCs offer enhanced efficiency, speed, and security; they are not just digital versions of physical credentials. They give users control over who has access to their credentials and for how long, prioritizing privacy and consent. With VCs, users can present only the essential claims from their credentials without disclosing additional personal information. 

8 Use Cases of Verifiable Credentials 

Verifiable credentials are versatile, secure, and privacy-enhancing, making them applicable across various sectors like finance, healthcare, education and more.

Here are eight key use cases:

1. Digital Identity Management and Verification

Verifiable credentials offer a secure and convenient way to verify an individual’s identity, with several advancements over traditional methods:

• Control Your Own Digital Identity: Individuals control their own digital identities, independent of centralized authorities. These identities are portable and cryptographically signed by issuers, ensuring easy access, integrity, and security.
• Government Issued VCs: Government agencies can issue verifiable credentials such as digital driving licenses or passports, simplifying immigration and travel processes.
• Streamlined and Privacy-focused Onboarding: Verifiable credentials enable streamlined customer and employee onboarding processes while safeguarding privacy by withholding unnecessary personal information. They comply with Know Your Customer (KYC) requirements.
• Integration with Existing Systems: Verifiable credentials seamlessly integrate with existing identity verification systems, enhancing efficiency and security.

2. Education 

In the education sector, verifiable credentials are streamlining processes and ensuring the security of digital certifications:

• Smoother Transfers Between Institutions: Simplify the admission process by reducing paperwork and enabling instant verification of applicants’ credentials.
• Tamper-proof Digital Certifications: Issue secure and tamper-proof digital certifications and transcripts.
• Seamless Academic Transitions: Facilitate seamless transitions between educational institutions.
• Control Over Credential Issuance: Provide educational institutions with greater control over the issuance and revocation of credentials.
• Secure Digital Transcripts: Securely manage and share digital transcripts containing academic records, grades, skills, and other relevant information.

3. Healthcare

Verifiable credentials are transforming the healthcare system by streamlining patient identity verification and addressing the need for confidentiality:

• Streamlined Patient Identity Verification: Eliminate manual processes and reduce errors with efficient patient identity verification.
• Patient Control Over Medical Records: Enable patients to maintain control over their medical records and selectively share information, ensuring privacy and consent.
• Authentication of Healthcare Providers: Authenticate healthcare providers’ licenses and certificates, minimizing fraud risks and protecting patients.
• Efficient Management of Vaccination Certificates: Effectively manage vaccination certificates and immunization records. These credentials ensure the authenticity and integrity of vaccination information and can be securely shared for travel, employment, or academic requirements.
• Digital Prescriptions: Serve as digital prescriptions, enhancing prescription management by reducing forgery and errors. Patients can maintain their prescription credentials, facilitating easy access to their medication history and prescription refills.
• Support for Emergency Response: Play a vital role in emergency and disaster response initiatives by verifying healthcare professionals’ identities and credentials, enabling the efficient mobilization of resources for timely and effective responses.
• Simplified Health Insurance Claims: Simplify health insurance claims, ensuring accuracy, preventing fraud, and expediting reimbursements.

4. Finance

The financial industry is reaping the benefits of verifiable credentials by ensuring secure and transparent solutions for transactions and decentralized finance:

• Secure Digital Wallets: Use secure and convenient digital wallets to store users’ digital payment credentials, allowing for seamless and trusted transactions.
• Simplified Cross-Border Payments: Simplify cross-border payments and remittances through instant verification of credentials.
• Essential for Smart Contracts: Play a crucial role in smart contracts and decentralized finance, ensuring trust and secure transactions without intermediaries.
• Verification and Fraud Prevention: Verify the authenticity of customer information, track transactions, and detect suspicious activities, mitigating fraud and enhancing anti-money laundering (AML) measures.

5. Banking

In the banking sector, verifiable credentials are revolutionizing customer onboarding, KYC processes, and identity verification:

• Seamless Customer Onboarding: Enable seamless customer onboarding for banks, reducing manual verification and improving customer experience. This also enhances fraud prevention measures.
• Streamlined KYC Processes: Streamline Know Your Customer (KYC) processes in banking, helping banks comply with Anti-Money Laundering (AML) regulations and establish customer trust.
• Identity Verification for Secure Transactions: Prove the identity of individuals for account access, transaction authorization, or remote customer interactions, preventing identity theft, unauthorized access, and fraudulent activities.
• Preserving Privacy with KYC Compliance: Allow compliance with KYC processes in banking while preserving privacy.

6. Retail

The retail industry is leveraging verifiable credentials to enhance product authenticity, secure transactions, and streamline customer interactions:

• Accurate Customer Identity Verification: Establish and verify customer identities accurately in retail transactions.
• Enhanced Product Authenticity and Supply Chain Transparency: Improve product authenticity and supply chain transparency. Products are assigned credentials containing information about origin, manufacturing processes, certifications, and quality assurance details. This enables customers to verify product integrity, supporting ethical sourcing, combating counterfeiting, and ensuring consumer trust.
• Secure and Efficient Age Verification: Enable secure and efficient age verification for age-restricted retail transactions.

7. Professional Credentials

Verifiable credentials are transforming the issuance, management, and verification of professional credentials:

• Secure Issuance, Management, and Verification: Enable secure issuance, management, and verification of professional licenses and accreditations. Digital credentials issued by licensing bodies and professional associations validate an individual’s professional qualifications, licenses, and compliance with industry standards. These credentials can also be revoked when necessary.
• Simplified Verification of Academic Degrees and Certifications: Simplify the verification of academic degrees and certifications. Educational institutions can issue digital credentials that contain verified information about a person’s educational achievements, including degrees earned, areas of study, and academic honors.
• Fraud Reduction and Public Protection: Reflect revocations of licenses or credentials by issuing authorities in the verified credentials, helping reduce fraud and protect the general public.
• Digital Resumes and Portfolios: Enable the creation of digital resumes and portfolios that showcase professional achievements, employment history, and skill information. These credentials can be easily shared with potential employers, streamlining the hiring process and facilitating a more thorough evaluation of candidates’ qualifications.
• Support for Remote Work and Distributed Teams: Provide a reliable way to verify remote employees’ qualifications and skills, supporting remote work and distributed teams.
• Establishing Professional Reputation: Professionals can establish their reputation through endorsements, client feedback, or performance evaluations embedded with trust attributes.

8. Devices

The world of connected devices is being secured and streamlined through the use of verifiable credentials:

• Secure Device Identity and Authentication: Enable secure device identity and authentication using unique digital credentials that contain relevant information such as firmware version, configuration details, or access permissions.
• Fine-Grained Access Control and Authorization: Enable fine-grained access control and authorization for devices. VCs can be used to manage permissions and control device interactions within a network or ecosystem. Device owners can define access policies, grant or revoke permissions, and enforce secure communication protocols to ensure authorized and controlled device interactions.
• Secure Firmware and Software Updates: Facilitate secure firmware and software updates for devices. VCs ensure that only authorized updates are installed, protecting against malicious firmware or software modifications.
• Simplified Device Ownership Transfer: Simplify device ownership transfer processes using VCs. VCs can serve as proof of ownership, transfer of ownership agreements, or warranty details. By securely sharing these credentials, device owners can transfer device ownership while ensuring transparency, authenticity, and proper documentation.

Conclusion

Identity.com

In the 21st century, verifying a user’s identity and the authenticity of their credentials has become increasingly urgent and crucial. Building on the decentralized ecosystem framework, verifiable credentials are revolutionizing existing structures and offering new solutions. It’s exciting to see Identity.com playing a role in shaping this desired future. Also, we are a member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.

The work of Identity.com as a future-oriented company is helping many businesses by giving their customers a hassle-free identity verification process. Identity.com is an open-source ecosystem providing access to on-chain and secure identity verification. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable gateway passes. Please refer to our FAQs page for more information about Identity.com and how we can help you with identity verification and general KYC processes.