Overview
Decentralized Identity (DID) represents a paradigm shift from centralized identity management to user-controlled, cryptographically verifiable credentials. Built on W3C DID and Verifiable Credentials (VC) standards, DID enables individuals and organizations to own their digital identity without relying on a central authority. Users store credentials in digital wallets and present proofs to verifiers on demand. Major implementations include Microsoft Entra Verified ID (30+ million credentials issued), EU Digital Identity Wallet (eIDAS 2.0 mandating support by 2026), and enterprise solutions from Ping Identity, Mattr, and Hyperledger. The technology eliminates password fatigue, reduces identity fraud through cryptographic verification, and enables selective disclosure—users can prove they're over 21 without revealing their birthdate.
Why It Matters
Traditional identity creates honeypots—Equifax (147M), Yahoo (3B), and LinkedIn (700M) breaches exposed centralized credential stores as existential risks. DID inverts this model: users hold their own credentials, reducing breach impact and liability. The EU eIDAS 2.0 regulation mandates digital identity wallets for all EU citizens by 2026, making DID compliance-critical for European operations. Meanwhile, credential verification costs enterprises $40-50 per background check; Verifiable Credentials reduce this to near-zero for returning verifications. Early adopters like KPMG, NHS, and Walmart are using DID for workforce credentials, patient records, and supply chain verification respectively.
Key Concepts
1Decentralized Identifier (DID)
A globally unique identifier (e.g., did:web:example.com or did:ion:abc123) that resolves to a DID Document containing public keys and service endpoints. Unlike traditional identifiers (email, SSN), DIDs are created without a central registry, cryptographically controlled by the owner, and verifiable through DID resolution. W3C DID Core 1.0 became a recommendation in July 2022.
2Verifiable Credential (VC)
A tamper-evident credential with cryptographic proof of issuer, subject, and claims. Follows W3C VC Data Model: Issuer signs claims about a Subject, Holder stores in wallet, Verifier checks cryptographic proof. Examples: university diplomas, professional licenses, employment verification, age attestation. Credentials can be revoked via status lists.
3Digital Wallet
User-controlled application storing DIDs, private keys, and Verifiable Credentials. Platform wallets (Apple, Google) and dedicated wallets (Microsoft Authenticator, Mattr Wallet, European Digital Identity Wallet) compete. Wallets enable selective disclosure—present specific claims without revealing entire credential.
4Self-Sovereign Identity (SSI)
Identity philosophy where individuals control their digital identity without dependency on any single authority. 10 principles include existence, control, access, transparency, persistence, portability, interoperability, consent, minimization, and protection. DID/VC technology stack enables SSI principles.
5Zero-Knowledge Proofs (ZKP)
Cryptographic technique allowing proof of a claim without revealing underlying data. Example: prove age ≥21 without disclosing birthdate; prove credit score ≥700 without revealing exact score. Implementations include BBS+ signatures for selective disclosure and ZK-SNARKs for complex predicates.
6Trust Registry / Trust Framework
Governance layer defining which issuers are trusted for which credential types. Answers: 'Should I trust this diploma from Issuer X?' Examples: EU Trusted List, GLEIF for LEI credentials, professional licensing boards. Without trust registries, verifiers must establish bilateral trust with each issuer.
7Selective Disclosure
Presenting only required credential attributes rather than the entire credential. Enabled by BBS+ signatures and ZKP. Examples: share job title without salary, share vaccination status without medical history. Critical for privacy compliance (GDPR data minimization) and reducing over-sharing risk.
Key Capabilities
- Issue, hold, and verify credentials following W3C standards (DID Core 1.0, VC Data Model)
- Digital wallet integration for credential storage and presentation
- Selective disclosure and zero-knowledge proofs for privacy-preserving verification
- Credential revocation and status checking via status list or accumulator
- DID method support (did:web, did:ion, did:key, did:ethr) with resolution
- Trust registry integration for issuer verification
- Interoperability via OpenID for Verifiable Credentials (OID4VC) and DIDComm
- Backup and recovery mechanisms for wallet and credential portability
Benefits
- Eliminates password fatigue—credentials verified cryptographically without knowledge factors
- Reduces identity fraud through tamper-evident, issuer-signed credentials
- Enables privacy-preserving verification via selective disclosure and ZKP
- Instant verification—no need to contact issuer for each verification request
- User control and consent—individuals decide what to share with whom
- Reduced liability—no centralized credential honeypot to breach
- Portable identity—credentials move with users across employers, services, borders
- Compliance-ready for eIDAS 2.0, GDPR data minimization
Common Challenges
Learning Path
Learning path for Decentralized Identity professionals
Understand SSI Fundamentals
Learn self-sovereign identity principles, the DID/VC ecosystem, and why decentralization matters
Master W3C Standards
Deep dive into DID Core 1.0, Verifiable Credentials Data Model, and JSON-LD vs JWT formats
Explore Wallet and Protocol Landscape
Understand digital wallets, OID4VC protocols, and DIDComm messaging
Implement DID Solution
Hands-on with Microsoft Entra Verified ID, Hyperledger Aries, or Mattr platform
Build Trust Frameworks
Design governance for issuer trust, credential schemas, and ecosystem rules