What are verifiable credentials?

There are several parts to this.

First, credentials are built on trust. Trust is not generated by the blockchain, trust is something that happens in the real world – that’s how society has been working for thousands of years. 

KILT takes the old process of top-down trust in the real world and puts it into the digital world.

Anyone can build a credential. You could make your own. You could print your name on a piece of paper and stick your photo on it and write on it that you can drive, but people might not believe it just because you say it and made your own credential! 

It would be better to use one that is already there, that is already trusted, like a driving license from the government department that deals with them. That would probably have your photo, your name, it would include a vehicle class. You can go to most places in the world and they will look at it and look at your photo and say, ok, I trust it. It looks like a driving license and you look like the person in the photo.

But digitally, when you give your credentials to someone there’s no photo - it’s just numbers.  

So now a trusted entity is needed to confirm that those numbers really mean what they say they mean. In KILT this is called the attester. Basically, they confirm, or attest, that the information is true. They do this by digitally signing the digital credential and then sending it to the claimer. They also create a hash of the credential – a number representing the information – and store it on the blockchain. It’s not personal data or the document itself, it’s just a hash.

The important fact is: the credential is issued by the trusted entity to the user. And the user owns the credential. They can decide when to show it, to whom, and for what purpose. The trusted entity is not involved anymore. So, if you want to hire a car, you show your credential, your digital driving license, to the rental company. They check with the blockchain to see if this hash which comes out of your credential is actually present on the blockchain. If it’s present on the blockchain, it’s fine. You can hire the car and drive away. The driving license department will never find out about you hiring a car.

That’s why it’s called a verifiable credential; it’s a credential that can be verified.