Verifiable Credentials Vs. NFTs: A Primer

Unless you follow the working groups in digital identity, you might have missed the latest item of discussion: verified credentials (VCs.) VCs are a web2 technology with standards maintained by the W3C- but they will play a key role in web3.  We’ll go over a quick comparison between the two here.

NFTs and VCs share a few things in common:

  • They are both cryptographically signed, tamper-proof data objects carrying arbitrary information.
  • They are also unique in each instance, unlike fungible tokens.
  • They both offer some guarantees around the provenance of the data object itself.
  • They are both issued or minted by some authority (usually an account or contract in the case of NFTs.)

Crucial differences include:

  • VCs are non-transferable but can be issued, recovered, and revoked.
  • VCs are not platform-specific, but NFTs rely on a specific blockchain to deliver their usefulness.
  • VCs do not derive value from market dynamics, they are only valuable to the bearer.
  • VCs are typically more private than NFTs. Issuance is not broadcast to an entire network.
  • VCs are typically off-chain and stored locally.
  • Typically, centralized entities like businesses or governmental organizations issue VCs.

Overall, NFTs have focused on proving ownership of digital assets by a given account or address, whereas VCs have identity-related attributes.

Soon, Web3 will likely combine VCs and NFTs, giving NFTs provable identity relations between digital assets and those that own, sell or manipulate them. Additionally, zero-knowledge proofs can help demonstrate facts and properties without having to trust a 3rd party, a feature explored by protocols like ZKAttestor.

The relationship between permissions, ownership, and reputation is admittedly convoluted. However, the crypto space is just beginning to figure it out, with projects like Disco and the Soulbound NFTs concept by Glen Weyl and Vitalik Buterin exploring new ways to integrate, combine and apply non-transferability and third-party attestation. Vitalik has a post that dives deeper into some of the reasons a blockchain might be used for some VCs.

At Metagame, we’re thinking of how these permissions and data objects can evolve based on contributions or other parameters on-chain and off-chain. We’re confident that VCs and NFTs together will make reputation and status move more effectively and legibly between the natural world and the digital world.

About Metagame

Metagame explores the field of earned generative NFTs. We’ve produced a handful of earned NFTs anyone can mint, including Birthblock, an NFT visualizing your accounts age and experience in crypto, and Logbook, an aggregation of all the actions you've taken on-chain in a digestible way that you and other people can understand.

Questions or interest? Follow us on Twitter or join our Discord for help with contributions.

Subscribe to Metagame
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
This entry has been permanently stored onchain and signed by its creator.