ID Basics
12 min read

Verifiable Credentials and Digital Signatures

Let's get down to basics by learning more about Digital Signatures and how they are impacting the world of Digital Identity.
Written by
Tom Sargent
Published on
July 17, 2024

In today’s digital world our online identities are as important as our physical ones. But how do we prove who we are in a virtual world? This is where Verifiable Credentials and digital signatures come in. Let’s get into the world of digital identity and see how these technologies are changing our online interactions.

What are Verifiable Credentials?

Verifiable Credentials are like digital ID cards that prove claims about yourself in a secure and tamper-proof way. Imagine having your driver’s license, university degree or professional certifications as digital documents that you can carry in your phone.

These aren’t just digital copies but cryptographically secure credentials that can be verified instantly without contacting the issuer.

Verifiable Credential components

In a Verifiable Credential system there are three parties:

  • The Issuer: The trusted entity that creates and provides the Verifiable Credential. e.g. a university issuing a digital degree certificate.
  • The Holder: The person who owns and controls the Verifiable Credential. You would store your credentials in a secure digital wallet on your device.
  • The Verifier: The entity that needs to check the credential. e.g. an employer verifying a job applicant’s qualifications.

Digital signatures in Verifiable Credentials

Digital signatures are a key part of Verifiable Credentials. They are a unique digital stamp that proves the credential’s authenticity and that it hasn’t been tampered with. We sign physical documents to verify their authenticity, we sign digital documents with digital signatures.

Digital Signatures

A digital signature is a cryptographic technique used to validate the authenticity and integrity of digital messages or documents. It’s a virtual equivalent of a handwritten signature or seal but with much more security built in.

How digital signatures work

Digital signatures work on the principle of public-key cryptography. Here’s a simplified explanation:

  1. The signer has a pair of keys: a private key (kept secret) and a public key (shared openly).
  2. When signing a document, the signer’s software creates a unique hash (a fixed-size string of characters) of the document’s contents.
  3. This hash is then encrypted using the signer’s private key, creating the digital signature.
  4. The signature is attached to the document.
  5. To verify, the recipient uses the signer’s public key to decrypt the signature, revealing the original hash.
  6. The recipient’s software then hashes the document and compares it to the decrypted hash.
  7. If they match, the signature is valid, the document is authentic and has not been tampered with.

Compared to physical signatures

Traditional signatures rely on the physical characteristics of handwriting, digital signatures use complex math. Digital signatures are much more secure and harder to fake. Digital signatures also ensure the document hasn’t been tampered with after signing.

Digital Signatures vs Electronic Signatures

We need to distinguish between digital signatures and electronic signatures:

Electronic signatures is a broad term that includes any electronic data that signifies agreement, such as typing your name or clicking “I Agree”

Digital signatures is a specific type of electronic signature that uses cryptographic techniques to provide extra security and verification.

Why Digital Signatures for Online Identity

Digital signatures are important for online identity because they provide:

Authentication: They verify who the signer is.

Integrity: They ensure the document hasn’t been changed since signing.

Non-repudiation: The signer can’t deny signing the document.

Benefits

Authenticity and integrity

Digital signatures give you a high level of confidence that a document or credential is genuine and hasn’t been changed. In an online world where information can be copied or changed in seconds, this is vital.

Tampering and fraud prevention

Because any change to a digitally signed document invalidates the signature, it’s very hard for bad actors to change documents without being detected. This reduces the risk of fraud in digital transactions.

Trust in digital interactions

By providing a way to verify identities and digital documents, digital signatures help build trust in online interactions. This is key to the growth of e-commerce, digital government services and other online activities that require secure and trustworthy data exchange.

Industry use cases

There are many different use cases for VCs and Digital Signatures, all being developed around the world. Here are just a few:

Finance industry

In the finance sector, digital signatures are used to secure transactions, verify customer identities and ensure financial documents are intact. For example:

Banks use digital signatures to authenticate large transactions, so transaction details can’t be changed in transit.

In Ethereum cryptocurrency systems, smart contracts are executed with digital signatures to verify the initiator.

Travel and hospitality

Digital passports and IDs can carry digital signatures from the issuing authority, so you can verify quickly and securely at the airport or hotel.

Travel bookings and confirmations can be digitally signed, so you have tamper-proof proof of your booking.

Education

Universities can issue digital diplomas and transcripts signed with their digital signature. Employers can verify these credentials instantly without contacting the university.

When students take online exams, their answers can be digitally signed, so the submission is intact and the student’s identity is verified.

Voting & Government

In e-voting systems, digital signatures can verify the vote while keeping the voter private.

Government documents like licenses, permits and certificates can be digitally signed, so they can be verified easily and can’t be forged.

The future of Digital Signtaures

Here are the trends shaping the future of digital signatures in identity management:

Blockchain: Digital signatures are being integrated with blockchain for an immutable record of signed transactions.

Biometric: Digital signatures with biometric data (fingerprints or facial recognition) is making identity verification more secure.

Cloud based digital signature services: Making it easy for individuals and businesses to implement digital signature solutions without any technical expertise.

We will soon start to see the application of even more advanced technologies to this area. Shortly we might seeing things such as:

Standardization: As digital signatures become mainstream, we will see more global standards for interoperability.

Quantum resistant algorithms: With quantum computing around the corner, new algorithms are being developed to keep digital signatures secure.

AI integration: Artificial intelligence will be used to make digital signature systems more secure and efficient, potentially detecting fraud in real time.

Vidos’ digital identity solutions

We’ve seen how digital signatures are the foundation of secure online identity and transactions. They ensure authenticity, integrity and non-repudiation in our online interactions. From finance to education, healthcare to government services, digital signatures are changing how we verify identities and validate information online.

At Vidos we are committed to utilising the power of digital signatures to provide you with leading digital identity solutions. We know in a digital world the need for secure, verifiable online identities is more important than ever. Our solutions use the latest in digital signature technology to keep your digital identity secure, verifiable and under your control.

Looking ahead Vidos will continue to innovate in this space, stay ahead of the trends and security threats. We will provide our users with the tools to feel safe in the digital world knowing their online identity is protected by the latest digital signature technologies.

We are not just adopting new technologies, we are building a more secure, efficient and trustworthy digital world for everyone. Join us.

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What to learn more?
Download our guide:

The New Digital Identity Landscape

As we look towards the future, the landscape of digital identity is poised for further evolution. Innovations in technology, shifts in regulatory frameworks, and changing user expectations are all shaping the direction of this journey.
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