The Quiet Corner of Web3 That Means Business

Executives are hearing a lot about Web3, a blockchain-based road map for the future internet whose building blocks include cryptocurrencies, non-fungible tokens, decentralized autonomous organizations, and, perhaps most famously, the persistent virtual worlds that the so-called metaverse comprises. It’s early days for most of these developments — but leaders who want to be out in front on emerging technologies should take note of decentralized credentials, one of the quieter but more promising applications under the Web3 umbrella.

While not every organization will need to build a brand in a metaverse or transact with cryptocurrencies, all organizations manage credentials as issuers, holders, and verifiers. Every organization issues credentials to employees, customers, suppliers, and partners; an account for identity management is the most ubiquitous credential issued. Every organization holds multiple credentials, such as a license to operate, taxpayer identification, and securities registration. Every organization verifies proof of credentials from employees, customers, suppliers, and partners. These three roles, along with a governing authority, form a credentials ecosystem. Today, organizations manage their credentialing needs with centralized databases or by paying trusted third parties. Solutions are often expensive, slow, frustrating to use, and wrought with cybersecurity risks. Let’s not forget that the 2020 SolarWinds breach that affected hundreds of U.S. government organizations and businesses was enabled by stolen log-in credentials.

Decentralization empowers holders to control their own credentials via a digital wallet. It’s up to the holder to accept a digital credential offered to them by an issuer or to provide proof of a credential to a verifier. Privacy is enhanced because holders often need to present only a part of a credential to a verifying organization. For example, customers ordering a beer at a pub can prove they are of legal drinking age without revealing other information that may be found on a driver’s license, such as their name, exact birth date, disability status, or home address.