VCs, DIDs, and the Fight for Digital Autonomy

Introduction: The Next Chapter in Self-Sovereign Identity (SSI)

The previous article in this series discussed Decentralized Identifiers (DIDs) as a fundamental paradigm shift in digital identity management. DIDs provide users with the ability to create and control their own digital identifiers independently of centralized registries, identity providers, or certificate authorities. In essence, DIDs answer the question "who are you?" by offering a unique, cryptographically verifiable identifier that serves as an anchor for digital identity within the concept of Self-Sovereign Identity (SSI).

Now that the foundation has been laid with DIDs, the logical next step in building a comprehensive SSI system is to consider Verifiable Credentials (VCs). If DIDs define who you are, then VCs answer the question of what is said about you (or someone/something). Verifiable Credentials contain verifiable assertions, attributes, or qualifications, such as a university diploma, a driver's license, a course completion certificate, or a membership certificate. They are a logical extension of the capabilities of DIDs, allowing verifiable and trustworthy data to be attached to these decentralized identifiers.

The concept of Self-Sovereign Identity (SSI) aims to provide individuals and organizations with complete and exclusive control over their digital identity data, rather than relying on external providers. Verifiable Credentials are a critical tool for realizing this vision. They allow users to manage their own verifiable assertions and decide what information to provide, to whom, and under what conditions. This symbiotic relationship between DIDs and VCs is crucial: DIDs without VCs are simply identifiers without the context of assertions, while VCs without a reliable, user-controlled identity anchor like a DID lack a foundation. DIDs act as the cryptographic anchor for VCs, ensuring they are bound to a specific subject. Their combined use creates a powerful synergy necessary for a fully functional SSI.

Verifiable Credentials contribute to the creation of a more secure, private, and user-centric internet. They are the foundation for ecosystems that also utilize Zero-Knowledge Proofs (ZKPs), which will be discussed in detail in the next article in this series. The importance and maturity of VC technology are underscored by the recent publication of the Verifiable Credentials Data Model 2.0 standard by the World Wide Web Consortium (W3C) in May 2025. This standard signals the technology's readiness to become the backbone for building a global digital trust infrastructure. Moreover, VCs catalyze the transition from a model of "trust through intermediaries" to "trust through verifiability." Traditional systems rely on centralized intermediaries to confirm identity and attributes, often entailing inconvenience and risks. VCs, thanks to built-in cryptographic mechanisms, allow for direct verification of the authenticity and integrity of assertions, reducing dependence on such intermediaries and returning control to users.

What are Verifiable Credentials (VCs)?

Verifiable Credentials (VCs) are digital equivalents of physical credentials like driver's licenses, educational diplomas, or passports, but with significantly enhanced capabilities and characteristics. According to the W3C definition, VCs are a set of claims made by an issuer about a subject. They are a mechanism for expressing digital credentials in a way that is cryptographically secure, respects privacy, and is machine-verifiable.

Key characteristics of Verifiable Credentials include:

• Cryptographic Security: The authenticity and integrity of VCs are ensured through digital signatures and other cryptographic methods. This makes them tamper-evident/tamper-proof. Any attempt to alter the data in a VC after its issuance will invalidate the cryptographic signature.
• Privacy-respecting: VCs are designed with data minimization and prevention of unwanted data correlation principles in mind. They support selective disclosure mechanisms, allowing users to share only those parts of their credentials necessary for a specific transaction or interaction. The user has full control over what data is provided and to whom.
• Machine-verifiable: VCs are typically represented in a standardized data format, such as JSON-LD (JSON for Linked Data). This makes them machine-readable and allows for the automation of verification processes, significantly increasing efficiency and reducing the likelihood of errors.
• User Control: The Holder of the VC stores their credentials, usually in a special digital wallet, and independently decides when, with whom, and what information to share. This principle is a cornerstone of the Self-Sovereign Identity (SSI) concept.

The difference between VCs and traditional digital and paper credentials is quite significant. Traditional certificates, whether paper documents or their digital counterparts (e.g., PDF files), are easily forged and difficult to verify. Verifying their authenticity often requires manual intervention, long waits, or direct contact with the issuing organization. In contrast, VCs provide the ability for instant cryptographic verification without needing to contact the issuer at the moment of verification. This makes VCs considerably more resistant to fraud and offers improved portability and interoperability thanks to standardization.

It is important to understand that VCs are not just digitized paper documents, but a fundamental rethinking of the attribute verification process itself. A simple scanned copy of a diploma in PDF format does not possess built-in cryptographic verifiability and is easily forged. VCs, however, contain the issuer's cryptographic signature, which irrefutably proves the authenticity and integrity of the data. Furthermore, they allow for selective disclosure of information, which is impossible with a simple PDF file that must be shown either entirely or not at all. Thus, VCs represent a qualitatively new tool that changes the very approach to how we prove and verify information.

Standardization, conducted by organizations like the W3C, is a critical factor for the mass adoption and success of VCs. The W3C is an international consortium that develops web standards, and its recommendations carry enormous weight in the industry. The W3C Verifiable Credentials Data Model standard (current version 2.0) defines the common structure, semantics, and data formats for VCs. This allows different systems and applications (digital wallets, verification services) to uniformly process and understand VCs, regardless of who issued them and where. Without such interoperability, the value of VCs would be limited to closed, isolated ecosystems, which contradicts the very idea of SSI and building a global network of digital trust.

For clarity, here is a comparative table:

Table 1: Comparison of Traditional Credentials and Verifiable Credentials (VCs)

The Verifiable Credentials Ecosystem: The Trust Triangle

The Verifiable Credentials ecosystem includes three main participants whose roles and interactions form the so-called "trust triangle."

• Issuer: This is an organization, institution, or individual that creates, cryptographically signs, and issues Verifiable Credentials. Examples of issuers include governments (issuing passports or driver's licenses), universities (issuing diplomas), employers (issuing employment certificates), or any other organization authorized to make assertions about subjects. The issuer is responsible for the accuracy of the assertions contained in the VC.
• Holder: This is the subject (a person, organization, or even a device) that receives Verifiable Credentials from an issuer, stores them (usually in a special application – a digital wallet), and manages them. The holder presents their VCs (or a part of them in the form of a verifiable presentation) to verifiers to confirm certain facts about themselves. A key aspect is that the holder controls their data and independently decides to whom, when, and what information to disclose. In most cases, the holder and the subject of the VC (the one about whom the assertions are made) are the same entity. However, situations are possible where they are different entities; for example, a parent may be the holder of their child's VC, or a company owner may be the holder of VCs pertaining to their organization.
• Verifier: This is the party that requests and verifies Verifiable Credentials to make some decision. Examples of verifiers include employers (verifying candidates' diplomas), airport security services (checking passports), websites (verifying a user's age), or any other services that need to ascertain certain attributes of the holder. The verifier checks the issuer's cryptographic signature, the VC's validity period, its status (whether it has been revoked), and other aspects to confirm the authenticity and timeliness of the presented information.

Interactions between these three participants are built on a trust model where:

1. The Issuer issues a VC to the Holder.
2. The Holder presents the VC (or a Verifiable Presentation, which will be discussed later) to the Verifier.
3. The Verifier checks the VC. In doing so, it trusts the Issuer's cryptographic signature (if the Issuer itself is recognized by the Verifier as a reliable source), not necessarily the Holder directly. This model allows the Verifier to trust the assertions contained in the VC without needing to directly contact the Issuer at the moment of verification. It's important to note that the Verifier independently decides whether to trust a specific Issuer and the VCs they have issued.

Verifiable Data Registries (VDRs) play an important role in this ecosystem. These are systems that can store publicly accessible information necessary for the use and verification of VCs. Such information includes subject DIDs, issuer public keys, VC schemas (templates), lists of revoked credentials, and other metadata. VDRs can be implemented in various ways: they can be traditional centralized databases, decentralized databases, or distributed ledgers, such as blockchains. They provide a reliable and tamper-proof source of data that facilitates the processes of creating and verifying credentials and play a key role in establishing trust within the ecosystem. All participants in the ecosystem must trust the VDR to correctly reflect who controls what data and that the information in it is protected from tampering.

When considering decentralization in the context of VCs, it's important to understand that it primarily refers to the decentralization of control and trust, not necessarily the decentralization of all system components. Although VDRs can be implemented on a blockchain, the VC model itself does not mandate the use of blockchain for storing the VCs themselves or for every aspect of interaction. What is key is that VC verification does not require the Verifier to have a constant online connection with the Issuer or any central server at the moment of verification. The cryptographic self-sufficiency of VCs means that proof of authenticity is embedded within the VC itself. The Verifier needs access to the issuer's public key (which may be in a VDR) and, possibly, to information about the VC's revocation status. The VCs themselves are stored by the Holder and are under their control. Thus, "decentralization" in the VC ecosystem aims to shift control over data to the user and eliminate single points of failure, rather than mandating the placement of all data on a blockchain.

Although the "trust triangle" describes basic technical interactions, broader rules and policies are needed for the widespread adoption and functioning of the VC ecosystem on a global scale. The Verifier must decide whether to trust a specific Issuer. In a small, closed system, this might be simple. However, in a global ecosystem with thousands of potential Issuers, this becomes a complex task. This is where trust frameworks come into play. These are sets of rules, policies, standards, and agreements that operationalize the trust model in a real-world ecosystem. They define requirements for identity verification processes, credential issuance, authentication, security and privacy assurance, as well as the legal liability of participants. Such frameworks allow different organizations and jurisdictions to mutually recognize digital credentials, creating a basis for interoperability and scalability – for example, so that digital driver's licenses issued in one country are recognized in another. VDRs can serve to store information about trusted issuers accredited within such a framework. Without such trust frameworks, each Verifier would be forced to individually assess each Issuer, which is inefficient and does not scale.

Anatomy of a Verifiable Credential: The W3C VC Data Model 2.0 Standard

The W3C Verifiable Credentials Data Model v2.0 standard, officially published as a W3C Recommendation in May 2025, represents a significant step in the development of digital identity technologies. Its main goal is to simplify the processes of expressing, exchanging, and verifying digital credentials while simultaneously enhancing their security and reliability. Particular attention in the standard is paid to privacy preservation goals and facilitating the prototyping of new types of VCs. The basis for data representation in VC DM 2.0 is JSON-LD (JSON for Linking Data), which promotes a decentralized approach to extensibility and does not require prior permission to create new types of credentials.

The main components of a verifiable credential, according to W3C VC DM 2.0, include:

• Claims: This is the main content of the VC, representing statements about the subject. Claims are usually expressed as "subject-property-value" relationships. For example, the claim "Pat is an alumnus of Example University" could be represented as {"subject": "Pat", "property": "alumnusOf", "value": "Example University"}. Claims can include diverse information: data for identifying the subject (e.g., photo, name, identification number), information about the issuing organization, specific attributes or properties of the subject (e.g., citizenship, date of birth, right to drive certain categories of vehicles), as well as restrictions imposed on the credentials (e.g., expiration date, terms of use).
• Metadata: This is information about the verifiable credential itself. Key metadata fields include:
  • id: A globally unique identifier for the VC, which must be a URL and can be a DID.
  • type: An array of strings indicating the type(s) of credentials. The first element of the array must always be VerifiableCredential. Subsequent elements can indicate more specific types, for example, UniversityDegreeCredential. Types are important for the rapid interpretation of VC content by various systems.
  • issuer: The identifier of the issuer, which must also be a URL (often a DID).
  • validFrom: The date and time (in ISO 8601 format) from which the VC is considered valid. In VC DM 2.0, this field replaces issuanceDate from previous versions of the standard.
  • validUntil: (Optional) The date and time (in ISO 8601 format) until which the VC is considered valid. This field replaces expirationDate.
  • credentialSubject: An object containing one or more claims about the subject(s) of the VC. This object can also contain the id of the subject (e.g., their DID).
  • Other important, but often optional fields: credentialStatus (for checking the VC's status, e.g., whether it has been revoked), termsOfUse (conditions for using the VC), evidence (evidence based on which the VC was issued), credentialSchema (a link to a schema describing the data structure of credentialSubject).
• Cryptographic Proofs / Signatures: This is an integral part of VCs, ensuring their authenticity (confirmation of who issued the VC) and integrity (guarantee that the VC has not been altered after issuance). Cryptographic proofs allow a verifier to check the VC without needing to contact the issuer at the moment of verification. Various types of signatures and proofs can be used, for example, based on JSON Web Signatures (JWS) or Data Integrity proofs.

Data Format (JSON-LD) and Protection Mechanisms:

• JSON-LD (JSON for Linking Data): This is the standard serialization format for VCs. JSON-LD allows the use of so-called contexts (@context) to define short aliases for long URIs, making VCs more human-readable and developer-friendly. More importantly, JSON-LD provides semantic interoperability, allowing different systems to understand the meaning of the data in VCs.
• Protection Mechanisms: The VC DM 2.0 standard and accompanying specifications define various ways to cryptographically protect VCs:
  • Data Integrity Proofs: These are proofs embedded in VCs that use various cryptographic suites (cryptosuites) to meet diverse security needs. Examples of such suites include EdDSA, ECDSA, and BBS (BBS signatures are particularly useful for implementing selective disclosure).
  • JOSE (JSON Object Signing and Encryption) and COSE (CBOR Object Signing and Encryption): The W3C specification defines how VCs can be protected using these widely adopted IETF technologies. In this case, the proofs "wrap" the VC (enveloping proofs), unlike embedded Data Integrity proofs.

The development of VC DM 2.0 is not just a numerical version update of the standard. It reflects the maturity of the verifiable credentials ecosystem and the lessons learned from the practical implementation of previous versions. Changes such as the introduction of validFrom and validUntil fields instead of issuanceDate and expirationDate, as well as an enhanced focus on privacy aspects and simplified prototyping, indicate the development of a practical understanding of user and developer needs. The integration or support of technologies that have proven effective in real-world applications, such as TruAge for age verification, also demonstrates that the standard is adapting to successful practices and striving for greater relevance.

Flexibility in choosing proof mechanisms (Data Integrity with various cryptosuites, JOSE/COSE) is an important feature of the VC architecture. This allows developers and organizations to select the most appropriate method for protecting VCs depending on specific security requirements, the need to support selective disclosure, existing infrastructure, and other factors of a particular use case. There is no single universal solution for all scenarios, and the standard takes this into account.

Below is a table summarizing the key components and fields of a VC according to W3C VC DM 2.0:

Table 2: Key Components and Fields of a VC according to W3C VC DM 2.0

Verifiable Presentations (VP)

Verifiable Presentations (VPs) play a key role in the process of exchanging verifiable credentials, providing flexibility and privacy for the holder. A VP is a data object created by the Holder to present one or more Verifiable Credentials (VCs) to a Verifier in a controlled manner.

Structurally, VPs package one or more VCs and may contain additional information, such as proof of the Holder's control over the presentation itself (e.g., a digital signature from the Holder, created using their DID key). This proof, often called "holder binding," is critical for confirming that the presentation originates from the legitimate Holder of the VCs. VPs are typically short-lived artifacts created for a specific interaction with a Verifier and are not intended for long-term storage.

One of the most significant functions implemented through VPs is Selective Disclosure. This capability allows Holders to provide Verifiers with only the necessary subset of claims from their VCs or to combine claims from multiple VCs into a single presentation. Selective disclosure is a key mechanism for protecting user privacy, as it allows them to disclose only the minimally necessary information for a specific transaction or service without transmitting superfluous personal data. A classic example is proving legal age (e.g., "over 18") without revealing the exact date of birth or other personal information contained in a driver's license or passport.

Technologies such as BBS signatures (mentioned in W3C specifications as one of the cryptosuites for Data Integrity proofs) or Zero-Knowledge Proofs (ZKPs) can be used for the technical implementation of selective disclosure. ZKPs, in particular, allow proving the truth of a certain statement (e.g., "my age is within the permissible range" or "I have the necessary qualification") without revealing the underlying data of that statement. (ZKPs will be discussed in more detail in the next article).

Verifiable Presentations can be viewed as a dynamic and context-dependent way of exchanging data, in contrast to the more static nature of Verifiable Credentials themselves. If VCs are, conditionally speaking, "what is" (a set of claims issued by an issuer), then VPs are "what I want to show now" (a specially formed data package for a specific verifier and a specific purpose). A Holder may have many VCs from various issuers in their digital wallet. Different verifiers or different situations may require completely different sets of information. VPs allow the Holder to "on the fly" assemble the necessary claims from one or more VCs, possibly add some of their own claims, and accompany all this with their own proof of ownership. This makes the data exchange process extremely flexible and adapted to the specific context of interaction, which enhances user control over their data.

The ability of VPs to provide cryptographic holder binding is critical for preventing the simple copying and misuse of VCs by other parties. VCs themselves prove that an Issuer made certain claims about a Subject. However, if a VC is simply passed to a Verifier, how can the Verifier be sure that the presenter is the legitimate Holder to whom this VC was issued, or who has the right to present it? A Verifiable Presentation solves this problem by allowing the Holder to add their own cryptographic proof (e.g., sign the VP with their key associated with their DID). This proof directly links the presentation to the Holder. Thus, the Verifier gains confidence that they are interacting with the intended Holder, and not with someone who has merely obtained a copy of the VC.

Advantages of Verifiable Credentials

Verifiable Credentials (VCs) offer numerous advantages over traditional identity management systems, making them a powerful tool for building a new era of digital trust.

• Enhanced security and protection against forgery: One of the main advantages of VCs is their cryptographic security. The use of digital signatures makes VCs tamper-evident/tamper-proof. Any attempt to modify the data in a VC after its issuance will invalidate the signature, which will be immediately detected during verification. This significantly reduces the risk of fraud associated with document forgery compared to paper or simple digital files like PDFs.
• Privacy and granular user data control: VCs are designed with privacy and data self-sovereignty principles in mind. Users gain full control over their data and independently decide what information, when, and to whom to disclose. Support for Selective Disclosure mechanisms allows sharing only strictly necessary information for a specific transaction, without transmitting superfluous personal data. Zero-Knowledge Proof (ZKP) technologies further enhance this aspect, allowing proof of the truth of an assertion (e.g., that the user's age exceeds a certain threshold) without revealing the value of the assertion itself (the exact age).
• Portability, interoperability, and User Empowerment: VCs are stored in digital wallets under the user's full control, ensuring their portability – they can be easily transferred and used in various contexts. Standardization led by the W3C ensures a high level of interoperability, allowing VCs issued by one system to be understood and verified in other systems and on different platforms. This makes users true sovereigns of their data, which is the core of the SSI concept.
• Simplification and acceleration of verification processes: VC verification can be performed instantly and automatically using software. This eliminates the need for lengthy manual checks, requests to issuers, or cross-referencing with databases, which was characteristic of traditional processes. Consequently, administrative costs for organizations that need to verify credentials are significantly reduced.

Beyond these direct benefits, the adoption of VCs also carries deeper transformational effects. The economic efficiency of VCs is evident not only in reduced document verification costs but also in the potential for creating new business models and services. Simplifying and reducing the cost of trusted interactions in the digital environment can stimulate innovation in a wide variety of sectors. For example, fast and reliable verification reduces risks for businesses when hiring employees, providing loans, ensuring access to services, or in the sharing economy, where VCs can simplify the verification of participant reliability. The ability for users to easily and securely share their verified data can lead to the emergence of new personalized services that were previously impossible or too complex due to barriers related to trust and data exchange.

Furthermore, VCs contribute to the creation of fairer and more inclusive digital systems. By providing individuals with control over their identities and the means of confirming them, VCs can help people who lack access to traditional forms of identification (e.g., due to a lack of official documents or living in remote regions) gain access to necessary services and opportunities. SSI and VCs allow for the decentralized creation of identifiers and attestations. This can be particularly important for vulnerable populations, such as refugees, migrants, or residents of developing countries, where access to government documents may be difficult. Although some types of VCs still require authoritative issuers, the infrastructure itself becomes more accessible, flexible, and user-oriented.

Real-World Use Cases for VCs

The theoretical advantages of verifiable credentials are increasingly being confirmed in real-world projects and pilot implementations around the globe. The diversity of these examples underscores the versatility of VC technology and its potential to transform numerous industries.

• Education (digital diplomas and certificates): One of the most discussed examples is the use of VCs for issuing digital diplomas and academic certificates. Leading universities, such as Stanford University and the Massachusetts Institute of Technology (MIT), are already experimenting with or implementing systems for issuing digital educational credentials based on VCs or similar blockchain technologies. For instance, MIT issued thousands of digital diplomas to its graduates as early as 2017, placing them on a blockchain. Such digital diplomas provide instant verification of their authenticity by employers or other educational institutions, eliminating the need to send requests to the university and significantly reducing the time for verification and document processing.
• Age Verification (TruAge technology): TruAge technology is a prime example of the successful application of VCs to solve a specific everyday problem – age verification for purchasing age-restricted goods. TruAge has been integrated into the W3C Verifiable Credentials 2.0 standard, highlighting its significance and alignment with cutting-edge developments in this field. The system uses encrypted, single-use digital tokens to transmit only the minimally necessary data (such as driver's license number, state of issue, expiration date, and date of birth) to confirm the buyer's legal age. This not only enhances privacy (as name, address, and other superfluous information are not disclosed to the seller) but also significantly speeds up the verification process (less than one second), reduces the likelihood of human error, and mitigates the risk of using fake IDs. TruAge technology is available to over 95,000 retail locations in the US and is integrated with California's mobile Driver's License (mDL) system.
• Government Services and Identification: VCs have enormous potential for modernizing government services and identification systems. This includes creating digital identity cards, digital driver's licenses, and digital passports. It is predicted that by 2025, many governments worldwide will adopt blockchain-based digital identity systems and VCs for issuing national IDs, passports, and voting credentials. W3C, in its use case examples, mentions a "Citizenship by Descent" scenario, and other sources cite the use of VCs for birth verification, which can be critically important for refugees. Practical steps are already being observed in this direction: Australia and Japan have demonstrated cross-border VC use capabilities, and New South Wales (Australia) is conducting a pilot project to transform digital photo cards for citizens into fully verifiable credentials.
• Healthcare: In healthcare, VCs can empower patients to securely store and control their medical records, prescriptions, vaccination certificates, and other sensitive information. Pharmacists, for example, could automatically verify a doctor's authority to issue certain prescriptions and the patient's corresponding insurance coverage. Another important aspect is the ability to confirm disability status to receive benefits or services without disclosing the specific diagnosis, which enhances privacy.
• Financial Sector: VCs can significantly simplify and accelerate Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, as well as bank account opening processes. They are also capable of enhancing the security of money transfers through reliable verification of the sender's and recipient's identity.
• Supply Chains and Logistics: Companies like Tradeverifyd are already using VCs to ensure secure and standardized data exchange in global supply chains, as well as for tracking the origin and authenticity of goods. Mavennet Systems views VCs as critical infrastructure for enabling digital traceability in industries such as energy and complex supply chains.

Successful pilot projects and implementations, like TruAge, play a key role in demonstrating the practical value of VCs and stimulating their wider adoption. They clearly show that the technology can solve real problems, be user-friendly, and deliver tangible benefits. The integration of TruAge into the VC 2.0 standard and its availability to a large number of retailers create an important precedent and contribute to raising awareness about the capabilities of VCs. Similarly, initiatives by renowned universities to issue digital diplomas lend weight and authority to the entire concept of verifiable credentials. Such examples serve as "beacons," illuminating the path for other industries and developers, and help overcome initial skepticism.

The wide variety of VC use cases – from education and retail to government services, healthcare, finance, and logistics – convincingly underscores their universality and enormous potential to become a fundamental layer of trust in the digital world. This is not a niche technology designed for one or two sectors. The fact that VCs can adapt to such a broad spectrum of needs and requirements for trust and verification speaks to their flexibility and fundamental utility. This suggests that in the future, VCs could become as basic and integral an element of digital infrastructure as TCP/IP is for the internet or HTTPS is for secure data transmission online today.

The Future of Verifiable Credentials and Digital Trust

Despite the obvious potential, the widespread adoption of verifiable credentials faces a number of challenges that require attention and coordinated efforts from developers, businesses, regulators, and users. Simultaneously, the integration of VCs with other advanced technologies and the development of robust governance frameworks open up exciting prospects.

Implementation Challenges and Solutions:

• Scalability: As the number of users and transactions grows, VC-based systems (especially those using blockchain as a VDR) may encounter performance issues and system slowdowns during peak loads. Possible solutions include using cloud architectures, load balancing mechanisms, caching, and employing specialized enterprise blockchain platforms optimized for high throughput.
• User Experience (UX): For mass adoption of VCs, ensuring simplicity and ease of use, especially for non-technical users, is critically important. Current solutions may seem complex, leading to resistance to change. Improving the UX of digital wallets and VC interaction processes is a primary task. This includes developing intuitive interfaces, providing quality educational materials, clearly demonstrating the technology's benefits, and adhering to inclusive design principles.
• Standardization and Interoperability: Although W3C plays a key role in developing standards, their universal adoption and ensuring full compatibility between different VC ecosystems and implementations remain an ongoing challenge. Further promotion and adherence to open standards, such as W3C VC Data Model, DID Core, and protocols like OpenID Connect, are necessary conditions for creating a unified global trust space.
• Regulatory Aspects: The absence of clear and harmonized legal frameworks in some jurisdictions can hinder VC adoption. It is necessary to ensure that existing and future solutions comply with data protection legislation (e.g., GDPR in Europe, CCPA in California) and other relevant regulatory acts.
• Legacy System Integration: Many organizations still rely on outdated IT systems, whose integration with new VC technologies can be complex, costly, and lead to implementation delays and data silos. API-driven middleware and phased adoption strategies can be solutions.
• Building Trust in Issuers: In a global VC ecosystem where virtually any organization can become an issuer, the question arises: how will verifiers determine which issuers can be trusted? This requires the development of reliable mechanisms for issuer accreditation and reputation management.

Integration with Other Technologies:

• Blockchain/DLT: Distributed ledgers are often seen as an ideal foundation for VDRs, providing immutability, transparency, and decentralized storage for issuer public keys, VC schemas, and credential revocation lists. It is expected that by 2025, up to 30% of all identity verification transactions worldwide will involve blockchain technology in some way.
• Artificial Intelligence (AI): Combining VCs and DIDs with AI opens new horizons for providing verifiable identity, accountability, and governance for AI agents. AI agents can receive VCs confirming their characteristics (e.g., architecture, model version), behavioral history, compliance with ethical norms, or security policies. This is particularly important in the context of both human-to-agent (H2A) and agent-to-agent (A2A) interactions. Protocols like LOKA Protocol propose the concept of a Universal Agent Identity Layer (UAIL) based on DIDs and VCs for managing the identity, accountability, and ethical behavior of AI agents. Zero-Knowledge Proofs (ZKPs) can be used to create confidential attestations about the properties or behavior of AI agents.

The Importance of Governance and Trust Frameworks:

For the successful functioning and scaling of the VC ecosystem, the creation and adoption of comprehensive trust frameworks are necessary. These frameworks must define common rules, policies, technical standards, and legal agreements that ensure mutual recognition and trust among all participants in the VC ecosystem. It is important to distinguish between trust models (which describe the technical basis and architecture of interactions) and trust frameworks (which operationalize these models through specific mechanisms of governance, accreditation, and oversight). Only with such frameworks can VCs issued by one issuer be seamlessly recognized and accepted by a wide range of verifiers across different jurisdictions and industries.

One of the significant challenges on the path to mass VC adoption is the classic "chicken and egg" dilemma: widespread adoption requires both issuers массово (massively) issuing VCs and verifiers ready to accept and process them. The absence of one side hinders the development of the other. Holders, in turn, will not be interested in obtaining VCs if there is nowhere to use them. The solution to this problem lies in stimulating key use cases that create obvious value for all participants, as well as in support from government initiatives (e.g., the European EUDI Wallet project) and successful commercial projects (such as TruAge), which can create an initial critical mass of users and services.

The future of VCs is closely linked not only to technological development but also to addressing ethical issues and ensuring human-centric system design. Technology should serve people, not the other way around. The application of VCs, especially in sensitive areas like identification or interaction with AI [32], raises complex ethical questions about accountability, potential bias, transparency, and control. Finding the right balance between security, usability, and privacy is an ongoing challenge for developers and policymakers. The success of VCs will largely depend on how well these non-technical but critically important aspects are addressed.

Finally, the emergence of the concept of VCs for AI agents opens up an entirely new paradigm of trust and interaction in a "machine-to-machine" format. This goes beyond traditional human-centric SSI and could have far-reaching consequences for the development of automated systems, the Internet of Things, robotics, and complex financial ecosystems. Creating a trust infrastructure that allows AI agents to prove their "identity," capabilities, origin, and policy compliance to other AI agents or systems without human intervention is becoming a necessary condition for the safe and predictable functioning of increasingly autonomous intelligent systems.

Conclusion: VCs as the Foundation for a More Secure and User-Centric Digital World

Verifiable Credentials, built on the solid foundation of Decentralized Identifiers (DIDs), represent a key element for the full realization of the Self-Sovereign Identity (SSI) concept. They mark a transition from models where users are forced to entrust their data to centralized intermediaries to a new paradigm where trust is based on cryptographic verifiability, and control over identity data is returned directly to individuals and organizations. VCs transform the ways we confirm information about ourselves and others, making these processes more secure, efficient, and private.

Despite existing challenges related to scalability, user experience, standardization, and regulatory aspects, the potential of verifiable credentials to revolutionize digital interaction is enormous. Ongoing work on standards, such as the W3C VC Data Model 2.0, active development of related technologies (including Zero-Knowledge Proofs, which will be discussed in detail in the next article in this series), and the emergence of new and more diverse use cases across various industries will contribute to their further dissemination and deeper penetration into our digital lives.

The ultimate goal of implementing verifiable credentials is not just technological improvement. It is a fundamental shift in the balance of power in the digital world. VCs are a powerful tool for empowering individuals and organizations, contributing to the creation of a fairer, more equitable, and user-centric digital society. By returning control over personal data to their rightful owners, VCs help reduce dependence on large technology platforms or government bodies that today often act as monopolistic guardians and controllers of digital identities. This, in turn, can lead to a reduction in the risks of mass data breaches, misuse of personal information, and digital discrimination. Thus, verifiable credentials are not just another technical innovation, but an important step towards more democratic, secure, and trustworthy data and identity management in the digital age.

In the next article, we will delve deeper into the world of Zero-Knowledge Proofs (ZKPs) and explore how they further enhance privacy and expand capabilities within the decentralized identity ecosystem built on DIDs and VCs.