How to Design a Decentralized Identity Verification for Claimants

Decentralized identity (DID) systems shift control of personal data from centralized authorities to the individual. For claimants, this means their identity proofs—like government IDs or proof of address—can be stored in a personal digital wallet as verifiable credentials (VCs). These VCs are cryptographically signed by trusted issuers (e.g., a government agency or financial institution) and can be presented to verifiers (like an insurance company) without revealing the underlying raw data. The core building block is a Decentralized Identifier (DID), a unique, self-owned identifier (e.g., did:ethr:0xabc123...) that acts as the root for a claimant's credentials, managed via a private key.

Designing this system requires selecting a DID method and a verifiable data registry. For Ethereum-based applications, did:ethr is common, storing the DID document's public key on-chain. For a more private, off-chain approach, did:key or did:jwk are options. The registry, often a blockchain or a decentralized network like IPFS, provides a tamper-proof anchor for DID documents. The claimant's wallet (e.g., MetaMask or a specialized VC wallet) creates a DID, requests VCs from issuers, and stores them securely. The verifier's system must be able to resolve DIDs from the registry and verify the cryptographic proofs on presented VCs.

A practical flow involves three steps. First, Issuance: A claimant authenticates with an issuer via traditional means (KYC), receives a signed VC (in W3C Verifiable Credentials format), and stores it. Second, Presentation: When filing a claim, the claimant receives a query from the verifier. Using Selective Disclosure protocols like BBS+ signatures, they can prove they are over 18 from a driver's license VC without revealing their birth date or ID number. Third, Verification: The verifier checks the issuer's signature on the VC, confirms the DID is not revoked, and validates the proof against the query.

Key technical considerations include revocation status. Using a revocation registry (like Ethereum smart contracts for status lists) allows issuers to invalidate credentials without exposing private claimant data. Interoperability is critical; adhering to W3C VC standards ensures credentials from different issuers work across verifiers. For developers, libraries like Veramo (TypeScript) or Aries Framework JavaScript provide abstractions for DID creation, VC issuance, and presentation exchange, handling much of the cryptographic complexity.

Implementing this design enhances claimant privacy and reduces fraud. Since claims are tied to a cryptographic identity, sybil attacks (creating multiple fake identities) become difficult. It also streamlines user experience; claimants can reuse verified attributes across services without repeated KYC. However, challenges remain, including key management for non-technical users and achieving widespread issuer adoption. The architecture lays a foundation for portable, user-centric identity in claims processing, insurance, and financial services.

Designing a decentralized identity (DID) system requires understanding several key concepts. You must be familiar with public-key cryptography, as it forms the basis for self-sovereign identity. Each claimant generates a cryptographic key pair; the private key is used to sign credentials, while the public key serves as their unique identifier, or Decentralized Identifier (DID). You should also understand Verifiable Credentials (VCs), a W3C standard for tamper-evident digital credentials. These are issued by trusted entities and can be cryptographically verified by any relying party without contacting the issuer.

For system requirements, you'll need a development environment capable of interacting with blockchain networks. This includes Node.js (v18 or later) or Python (3.9+) for backend logic, along with essential libraries. For Ethereum-based systems, you'll need web3.js or ethers.js. For broader interoperability, consider DID libraries like did-jwt-vc or veramo. A local blockchain node (e.g., Ganache) or access to a testnet RPC endpoint (like Sepolia or Goerli) is necessary for testing on-chain components like DID registries or smart contracts for revocation.

Architecturally, you must decide on a DID method, which defines how DIDs are created, resolved, and managed on a specific ledger. Common methods include did:ethr (Ethereum), did:key (simple key pairs), and did:web (web domains). Your design must also account for credential storage. Will claimants hold VCs in a mobile wallet (e.g., MetaMask Mobile, Trinsic Wallet), a cloud agent, or a browser extension? The choice impacts user experience and security. Finally, plan for revocation mechanisms, such as smart contract-based registries or the Status List 2021 specification, to invalidate credentials if needed.

A decentralized identity (DID) system for claimants shifts control from centralized authorities to the individual. The core architecture relies on three pillars: W3C Decentralized Identifiers (DIDs) for unique, self-sovereign IDs, Verifiable Credentials (VCs) for attested claims (like a government ID), and a Verifiable Data Registry, often a blockchain, for anchoring DIDs and credential schemas. Users hold their credentials in a digital wallet, while issuers (e.g., universities, governments) sign VCs, and verifiers (e.g., employers, platforms) request and validate proofs. This model eliminates single points of failure and gives users selective disclosure capabilities.

The data flow begins with issuance. A claimant requests a credential from an issuer. After off-chain KYC checks, the issuer creates a VC containing the claim (e.g., "isOver18": true), signs it cryptographically, and sends it to the user's wallet. The VC's integrity is linked to the issuer's DID, which is recorded on a blockchain. The claimant's wallet stores the VC securely, often using encrypted local storage or a secure enclave. No personal data is stored on-chain; the blockchain only records the DIDs and the credential's schema hash, ensuring privacy.

When a claimant needs to prove their identity to a verifier, the presentation flow is initiated. The verifier sends a Presentation Request, specifying which claims are required (e.g., proof of age and residency). The user's wallet uses a zero-knowledge proof (ZKP) library, like snarkjs for Circom circuits or arkworks for R1CS, to generate a Verifiable Presentation. This proof cryptographically demonstrates the user holds valid VCs satisfying the request without revealing the underlying credentials or unnecessary data. For example, a ZKP can prove a user is over 18 from a birthdate VC without disclosing the actual birthdate.

The verifier receives the Verifiable Presentation and validates it. This involves checking the cryptographic signatures of the issuer(s) against their DID on the blockchain, verifying the ZKP, and ensuring the presentation matches the request. Smart contracts on chains like Ethereum, Polygon, or Solana can automate this verification logic. Key design considerations include revocation mechanisms (using status lists or accumulators), key management for DID document updates, and interoperability standards to ensure VCs from one issuer can be used by any verifier in the ecosystem.

For implementation, developers can leverage existing SDKs and frameworks. The Decentralized Identity Foundation (DIF) maintains core specifications. For Ethereum-based systems, Veramo is a modular framework for issuing and verifying VCs. Serto and Spruce ID (with its did:key and did:ethr methods and Sign-In with Ethereum toolkit) provide robust developer tools. When designing the architecture, prioritize user experience for key management, plan for gas costs of on-chain DID operations, and ensure your system adheres to GDPR and other privacy regulations by design through data minimization and user consent.

A Verifiable Credential (VC) is a tamper-evident digital credential issued by a trusted entity, such as a university or employer. It contains claims about a subject (the holder) and is cryptographically signed by the issuer. The core data model is standardized by the W3C, ensuring interoperability across different systems. When designing a VC, you must define the credential's schema, which specifies the structure and data types of the claims it contains, such as degreeName, issuanceDate, or expirationDate. This schema acts as a blueprint for the credential's data.

The issuance process involves creating a Verifiable Credential Data Model object and wrapping it in a Verifiable Presentation for delivery. A basic VC in JSON-LD format includes the @context, a unique id, the type (e.g., VerifiableCredential, UniversityDegreeCredential), the issuer, the issuanceDate, the credentialSubject (the holder's DID and the claims), and a proof section containing the cryptographic signature. Issuers sign this data structure using a private key associated with their Decentralized Identifier (DID), which provides cryptographic proof of origin and integrity.

For implementation, you can use libraries like did-jwt-vc for JWT-based VCs or jsonld-signatures for JSON-LD proofs. Below is a simplified example of creating a VC using the did-jwt-vc library in JavaScript:

javascriptCopy
const { createVerifiableCredentialJwt } = require('did-jwt-vc');
const issuer = { did: 'did:ethr:0x123...', signer: issuerSigner };
const vcPayload = {
  sub: 'did:ethr:0xabc...', // Holder's DID
  vc: {
    '@context': ['https://www.w3.org/2018/credentials/v1'],
    type: ['VerifiableCredential', 'ProofOfEmployment'],
    credentialSubject: {
      id: 'did:ethr:0xabc...',
      jobTitle: 'Senior Developer',
      employedSince: '2023-01-15'
    }
  }
};
const vcJwt = await createVerifiableCredentialJwt(vcPayload, issuer);

This code generates a signed JWT representing the Verifiable Credential.

Key design considerations include selective disclosure, which allows holders to reveal only specific claims from a credential (e.g., proving they are over 18 without revealing their exact birthdate). This is often implemented using BBS+ signatures or zero-knowledge proofs. You must also decide on revocation mechanisms, such as maintaining a revocation registry (e.g., using the Ethereum Attestation Service) or implementing status lists. The choice of DID method (e.g., did:ethr, did:key, did:web) for the issuer and holder will determine the underlying blockchain or network used for key resolution and verification.

Before issuing, rigorously test your credential design with verification libraries to ensure compliance with the W3C specification. Publish your credential's JSON schema in a public, persistent location, such as a GitHub repository or an IPFS hash, so verifiers can understand its structure. Properly designed VCs are the foundation for trust-minimized interactions in decentralized applications, enabling users to prove qualifications, memberships, or attributes without relying on a central database.

After the claimant's identity is attested by a trusted issuer, the next step is to generate a zero-knowledge proof (ZKP). This cryptographic proof allows the claimant to demonstrate they possess a valid credential—like being over 18 or holding a specific certification—without disclosing the underlying data. The proof is generated client-side, meaning the sensitive information never leaves the user's device. This is a core privacy mechanism in decentralized identity systems like those built with Circom circuits or RISC Zero.

The generation process involves a proving key and a ZK circuit. The circuit, written in a domain-specific language, encodes the verification logic (e.g., birthdate < 2006-01-01). The claimant inputs their private credential data and a public statement (the claim) into this circuit. Using the proving key, their device runs a computation to produce a succinct proof, such as a zk-SNARK or zk-STARK. This proof cryptographically guarantees the statement is true, with a probability of forgery near zero.

For example, to prove age over 18, the claimant would input their birth date (private witness) and the current date (public input). The ZK circuit checks if the difference is greater than 18 years and outputs true. The resulting proof attests to this fact without revealing the birth date. Libraries like SnarkJS (for Circom) or the RISC Zero zkVM SDK provide the tools to perform this generation in a browser or mobile app.

This client-side proof is then packaged into a Verifiable Presentation, often following the W3C Verifiable Credentials data model. The presentation includes the proof, the public parameters, and a reference to the circuit used. It can be signed with the claimant's Decentralized Identifier (DID) to ensure authenticity. This creates a portable, privacy-preserving package ready for submission to any verifier.

The security relies on the soundness of the ZK system and the correct construction of the circuit. If the circuit has a logical flaw, false statements could be proven. Therefore, circuit design and auditing are critical. The generated proof is typically small (a few kilobytes) and fast to verify, making it practical for web and mobile applications requiring instant, trustless verification.

On-chain verification is the process of programmatically validating a claimant's submitted credentials against predefined eligibility rules stored in a smart contract. Instead of a manual review, the contract acts as an automated adjudicator. The core design pattern involves a verifyClaim function that accepts a Verifiable Credential (VC)—typically a signed JSON object or its hashed commitment—and checks it against the Verification Policy. This policy is a set of boolean logic rules (e.g., credential.schema == "KYC" AND credential.issuer == trustedDAO AND credential.issueDate > deploymentBlockTimestamp). Successful verification results in the minting of a Verifiable Presentation Token (VPT) or the direct approval of the claim, which is recorded immutably on-chain.

A critical implementation detail is deciding what data goes on-chain. Storing raw credential data is expensive and poses privacy risks. The standard approach is to use zero-knowledge proofs (ZKPs) or selective disclosure. A claimant can generate a ZK-SNARK proof (e.g., using Circom or Noir) that cryptographically proves their credential satisfies the policy without revealing the underlying data. The smart contract then verifies this proof. For simpler, non-private checks, you can submit a hash of the credential and its issuer's signature. The contract verifies the signature against a registry of trusted issuers and checks if the hashed data matches known criteria.

Here is a simplified Solidity example for a signature-based verification. It assumes the issuer signed a structured message containing the claimant's address and a data hash.

solidityCopy
function verifyClaim(
    bytes32 credentialHash,
    uint8 v,
    bytes32 r,
    bytes32 s
) public returns (bool) {
    address issuer = ecrecover(
        keccak256(abi.encodePacked(msg.sender, credentialHash)),
        v, r, s
    );
    require(isTrustedIssuer[issuer], "Untrusted issuer");
    require(eligibleCredentialHashes[credentialHash], "Credential not eligible");
    
    _mintVerificationToken(msg.sender);
    return true;
}

This function reconstructs the signer from the signature and checks it against a mapping of isTrustedIssuer. It also validates that the credentialHash is pre-approved in an eligibleCredentialHashes mapping, which the protocol admin would populate.

For complex adjudication involving multiple credentials or weighted scores, consider a modular rule engine. You can implement this as a series of contract calls or an internal scoring system. For instance, a disaster relief claim might require proof of residency (1 point), proof of property ownership (2 points), and a damage assessment report from a verified inspector (3 points). The adjudicate function would sum the points from validated credentials and approve the claim if the total meets a threshold. This design separates credential verification logic from business logic, making the system more upgradeable and composable with new credential types.

Finally, ensure your design includes robust event emission and error handling. Emit detailed events like ClaimVerified(address indexed claimant, bytes32 credentialId, address issuer) for off-chain monitoring and dispute resolution. Consider time-based constraints like claim windows and revocation checks. Always query a revocation registry (like an on-chain bitmap or a verifiable credential status list) within your verification function to ensure submitted credentials haven't been revoked by their issuer, a crucial step for maintaining system integrity over time.

You now understand the foundational layers: using Decentralized Identifiers (DIDs) for self-sovereign identity, Verifiable Credentials (VCs) for portable attestations, and Zero-Knowledge Proofs (ZKPs) for selective disclosure. The key is to combine these standards into a coherent flow where an issuer (like a government) signs a VC, a holder stores it in their digital wallet, and a verifier checks the proof without accessing raw data. This architecture shifts control from centralized databases to the individual claimant.

For implementation, start by selecting your protocol stack. For DIDs, consider the W3C DID Core specification with a method like did:ethr for Ethereum-based systems or did:key for simplicity. For credential management, use the W3C Verifiable Credentials Data Model. To enable ZKPs, integrate a proving system like Circom for circuit design and SnarkJS for proof generation/verification on Ethereum, or leverage an existing framework such as Sismo's ZK Badges or Polygon ID for a more managed solution. Your smart contract will need to verify proofs and manage a revocation registry, such as a Revocation Status List.

Focus on the user experience for claimants. The verification process must be simple: scan a QR code, approve a request in their wallet (like MetaMask or SpruceID's Kepler), and receive a confirmation. Avoid technical jargon in the UI. Ensure your system supports offline verification for low-connectivity environments and provides clear explanations for any rejected claims. The claimant's private keys and raw credentials should never leave their secured wallet environment.

Next, rigorously test your system's security and privacy guarantees. Conduct audits on your ZK circuits and smart contracts. Test edge cases: credential revocation, issuer key rotation, and verifier policy changes. Use testnets like Sepolia or Polygon Mumbai for deployment trials. Remember, the trust in your system derives from the cryptographic integrity of the signatures and proofs, not from a central authority.

Finally, consider the broader ecosystem. Your system should be interoperable. Design credentials to be usable across different verifiers and platforms. Explore integration with existing identity aggregators like Disco or Gitcoin Passport to bootstrap network effects. The goal is to create a system where a claimant's verified identity is a persistent, reusable asset that reduces friction across multiple services while maximizing their privacy and control.