5 Reasons To Adopt Verifiable Credentials
Current Methods Are Cumbersome and Expensive
Most of us have a number of important documents and credentials that are issued to us by various government departments or financial institutions. These can be our driver’s licenses, birth certificates, passports, educational certificates, professional licenses, health, and financial records. All of which are important and often referenced or required in conjunction with a number of activities.
As citizens and consumers we pay for these documents and credentials and where we don’t the costs of issuing these documents is certainly built into the service fees or taxes. So what does it cost organizations to issue these credentials? These costs can vary widely depending on the type of document, the issuing agency, and the underlying processes involved in producing or delivering the document. There are many factors that affect the fulfillment costs. These include:
Printing or production costs This includes the costs of materials such as paper or plastic and printing equipment and labor used.
Eligibility determination and verification costs This is perhaps the most important, costly and cumbersome component. The need to verify the identity and eligibility of an individual to receive the credential is perhaps the most important in reducing costs associated with fraud. And it is this step that is often core to most service delivery organizations in all industries.
Shipping and delivery costs This includes the cost of shipping the document to the applicant, as well as any associated tracking, insurance, or expedited delivery charges.
Security and fraud prevention costs These can include the costs of developing and security measures to prevent counterfeiting and fraud such as holograms, watermarks, or biometric data.
So from a consumer perspective, the costs associated with the issuance and receipt of these documents may be at times hidden, but we are all paying for it one way or another.
What Ushered in Verifiable Credentials?
The development of blockchain technology ushered in the use of verifiable credentials.
Blockchain is a distributed ledger technology that is inherently secure and tamper-proof. This makes it an ideal platform for the recording of important transactions and recording of important documents and credentials. They also allow individuals to control their own data and share it securely with others.
In this way, systems can use verifiable credentials as a way to represent and share important credentials, and allow individuals to present and verify their credentials without the need for a centralized intermediary.
The emergence of these technologies, along with growing concerns about personal data privacy, data security, and personal data sovereignty makes them a far better option to current methods and practice.
5 Benefits of Verifiable Credentials
Verifiable credentials have several advantages over traditional paper or plastic card issued credentials. Here are a few of the key benefits:
Security Verifiable credentials are digitally signed using cryptographic techniques that make them more secure and tamper-proof than traditional paper or plastic cards. This makes it more difficult for fraudsters to create fake or altered credentials.
Privacy Verifiable credentials can be designed to include only the necessary information, protecting the privacy of the credential holder. They can also be designed to deliver selective disclosure or derived predicates of the information on the credential at the discretion of the owner. This limits the amount of personal information shared with third parties. For example, you could use selective disclosure from a driver’s license to confirm age or residency without having to divulge other personal information such as home address.
Portability Verifiable credentials can be stored on a mobile device, making them more convenient to carry and access than traditional paper or plastic cards. This also makes it easier for individuals to present their credentials to others, without the need for physical proximity or contact. And third parties get 100% assurance of document authenticity and origin.
Interoperability Verifiable credentials can be designed to work across different systems and platforms, making it easier for organizations to accept and verify credentials from different sources. This can help to reduce duplication of effort and streamline credential verification processes and usher in new ecosystem business models or ‘network effects’.
Efficiency Verifiable credentials can be issued and verified quickly and easily. This virtually eliminates the time and effort expended with internal or external resources to validate credentials presented to an organization as part of eligibility determination activities. This delivers a massive improvement in client user experience and service delivery outcomes.
Bottom Line - Verifiable credentials are a more secure, private, portable, interoperable, and efficient method of issuing and sharing important documents and credentials.
In their report titled “Building Block(chain)s for a Better Planet”, published in 2020, the World Economic Forum suggested that 10-20% of global economic infrastructure will be running on blockchain-based systems by 2030. Verifiable credentials will play an important role in this transition across many industries including; Higher Education, Financial Services, Healthcare, and Government.