In The digital trust crisis: Why the future of security depends on verifiable identity, we explored why digital identity is at an inflection point — how traditional identity stacks alone might not be enough in a world where identity fraud is on the rise — and verifiable digital credentials (VDCs) are poised to transform how we verify information about people and organizations online. But how do they actually work?
Let’s break it down.
A smoother spark: Age verification reimagined
Your favorite holiday is approaching fast, so you boot up your laptop — you heard you can buy fireworks online and have them shipped right to your door. So convenient!
You spend way too much time filling your cart with sparklers, ground spinners, and the biggest array of noise makers you can find. Finally, you head to checkout and hit a wall. The store needs to verify your age.
Today, that likely means uploading a photo of your ID where your name, birthdate, and address are shared with a third-party processor — or worse, waiting for a manual review before you can check out.
Now imagine a better way:
Your U.S. state has issued you a mobile driver’s license (mDL) as a verifiable digital credential
You store it in your phone’s digital wallet
At checkout, the fireworks store asks, “Are you 18 or older?”
You approve a request on your phone to share just the information that shows you are over 18
Your age is instantly and cryptographically verified as over 18, with no human review, and no need to share your full birthdate or other info on your mDL.
Your purchase goes through in seconds, your personal data stays private, and the fireworks store gets what it needs; nothing more, nothing less.
That’s the power of verifiable digital credentials.
The trust triangle: Issuer, holder, verifier
This scenario reflects the three core roles in any verifiable digital credential interaction:
Instead of information about you living in one system or being repeatedly collected by different parties, credentials are issued to you digitally by a trusted institution — like the government, and stored in a wallet you own and control.
When a verifier needs to prove something about you, you present the relevant credential — no need to contact the issuer or re-upload a document. And because these credentials are digitally signed, they can be verified instantly and securely.
In traditional models, verification often means contacting the party that issued the credential (e.g., checking with a bank or calling a university using an API). With VDCs, the credential itself carries the proof cryptographically, and its authenticity can be validated independently.
Verifiable digital credentials are more trustworthy
VDCs aren't just digital copies of paper credentials. They're portable and cryptographically signed by the issuer.
Key properties include:
Authenticity: Verifiers can confirm the credential was issued by a trusted source
Integrity: Any changes to the credential can be detected immediately
Selective disclosure: Only the information required can be shared (e.g., age but not full birthdate)
These features help reduce fraud, streamline onboarding, and improve user privacy. For enterprises, this can mean faster compliance checks, reduced risk, and smoother customer experiences.
Better than traditional verification
In today’s world, verifying someone’s identity often means collecting and storing excess data — full birthdates, photos of documents, addresses — all of which become liabilities. Verification is often times manual, slow, and error-prone.
VDCs flip this model:
Traditional verification | Verifiable digital credentials |
Centralized databases or document uploads | Decentralized, wallet-based credentials |
Repeated checks and manual reviews | One-time issuance, reusable across interactions |
Risk from storing unnecessary personal data | Selective data sharing, controlled by the user |
These benefits appeal to both privacy-conscious users and businesses looking to reduce the amount of PII data they are collecting on users and exposure to data breaches.
VDCs vs. federation and authentication
It’s worth clarifying how VDCs differ from federation (e.g., SAML, OIDC) and from authentication itself.
Federation: Think “Sign in with Google.” This lets one service trust another to handle identity, but it relies on direct integrations, central intermediaries, and user tracking. VDCs offer trust without a live connection to the issuer — and without handing off user data every time.
Authentication vs. verification:
→ Authentication answers: “Is this the person who owns this account?”
→ Verification answers: “Is this person a licensed driver, certified nurse, or over 21?”
They’re complementary. You might authenticate someone with a passwordless login and then verify their employment using a credential from their HR system. VDCs enhance trust post-login — or even before account creation.
VDCs are gaining momentum
Digital identity isn’t just evolving — it’s here. In the U.S., millions of people already use mobile driver’s licenses (mDLs), with ABI Research projecting adoption to surge from ~21.7 million in 2025 to 143 million by 20301. In Europe, the EU’s Digital Compass sets a goal of 80% citizen adoption of digital identity solutions by 20302, building on live systems already in place in countries like Estonia.
Businesses are starting to tap into this shift today — from faster age verification to streamlined onboarding. What once required uploading documents or waiting days for checks can now be done in seconds, with credentials customers already hold. The technology is here; the question is how quickly organizations will adapt.
What’s next?
Verifiable digital credentials offer a better foundation for trust online. For businesses, they can reduce friction, minimize unnecessary data collection, and cut verification costs. For users, they can mean more control over personal data and less time spent proving who they are.
Learn more and see VDCs in action — visit oktacredentials.dev.
Sources
