Core Components of Web5

Web5 is built upon three fundamental components that enable decentralized identity and data management: Decentralized Identifiers (DIDs), Verifiable Credentials (VCs), and the Identity Overlay Network (ION). Together, these elements provide the technical foundation for self-sovereign identity, privacy-preserving data interactions, and secure, trustless ecosystems.

1. Decentralized Identifiers (DIDs)

What Are DIDs? A Decentralized Identifier (DID) is a unique, cryptographically verifiable identifier that enables self-sovereign identity. Unlike traditional identifiers (e.g., email addresses or usernames), DIDs are not tied to any centralized entity, giving users full control over their digital identity.

How DIDs Work

1. Creation: A user generates a DID locally, producing a pair of cryptographic keys—one public and one Example DID:

did:ion:EiA1xOQShlNzJmQ9rQPukTJ9...AcQn9A

1. DID Document: Each DID resolves to a DID Document, a JSON-based structure containing:

   • Public keys for verification.

   • Service endpoints for interactions (e.g., credential issuance).

DID Document Example:

{
  "@context": "https://www.w3.org/ns/did/v1",
  "id": "did:ion:EiA1xOQShlNzJmQ9rQPukTJ9....AcQn9A",
  "verificationMethod": [
    {
      "id": "did:ion:EiA1x...#key-1",
      "type": "EcdsaSecp256k1VerificationKey2019",
      "controller": "did:ion:EiA1x...",
      "publicKeyJwk": { "kty": "EC", "crv": "secp256k1", "x": "...", "y": "..." }
    }
  ]
}

1. Anchoring: The hash of the DID Document is anchored to the Bitcoin blockchain via the ION protocol, ensuring immutability.

2. Updates and Deactivations: Users can update their DID (e.g., rotate cryptographic keys) or deactivate it entirely by submitting a new operation to ION.

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2. Verifiable Credentials (VCs)

What Are VCs?

A Verifiable Credential (VC) is a cryptographically signed data structure that allows users to prove claims about their identity or data. These claims can be shared selectively, ensuring privacy and minimizing unnecessary data exposure.

How VCs Work

1. Issuance: An issuer creates a credential tied to the user’s DID and signs it using their private key.

   Example VC in JSON:

   {
     "@context": "https://www.w3.org/2018/credentials/v1",
     "id": "http://example.com/credentials/123",
     "type": ["VerifiableCredential"],
     "issuer": "did:ion:EiA1x...",
     "credentialSubject": {
       "id": "did:ion:EiB2x...",
       "claim": { "role": "DAO Member" }
     },
     "proof": {
       "type": "Ed25519Signature2020",
       "created": "2024-11-21T12:00:00Z",
       "proofPurpose": "assertionMethod",
       "verificationMethod": "did:ion:EiA1x...#key-1",
       "jws": "eyJhbGciOiJSUzI1NiIs..."
     }
   }

2. Storage: The VC is stored off-chain (e.g., IPFS or Arweave), with its reference linked to the user’s DID Document.

3. Verification: A verifier (e.g., a dApp or DAO) requests specific claims from the user’s VC. Using cryptographic proofs, the verifier ensures the credential is valid and issued by a trusted entity.

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3. Identity Overlay Network (ION)

What Is ION?

ION is a permissionless, open-source DID system built on Bitcoin. It operates as a Layer 2 protocol, enabling scalable DID operations without introducing new tokens or consensus mechanisms.

How ION Works

1. Batching Operations: DID operations (e.g., creation, updates) are grouped into batches and anchored as a single transaction on the Bitcoin blockchain.

2. Resolution: Applications resolve a DID by fetching its associated DID Document from ION’s decentralized network.

3. Benefits of ION:

   • Scalability: Batch processing reduces the number of Bitcoin transactions.

   • Immutability: Leveraging Bitcoin’s blockchain ensures tamper-proof identity records.

   • Decentralization: No central authority controls ION, making it resilient and trustless.

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Bringing It All Together

These core components—DIDs, VCs, and ION—work together to create a framework for self-sovereign identity in Web5:

• DIDs provide the unique identifier for a user’s digital presence.

• VCs allow users to prove claims securely and privately.

• ION ensures the integrity and trustworthiness of identity operations.

Web5 uses these components to redefine how individuals interact with the internet, enabling privacy-preserving, trustless interactions across decentralized ecosystems.