Digital Credential Wallet: A New Way to Present IDs and a Privacy Revolution for Identity Sovereignty

GM,

Decentralized digital identity (DID)1 2 is one of the most popular topics on Blocktrend. This week, Taiwan’s version of DID, known as the Digital Credential Wallet, has made new progress. The Ministry of Digital Affairs announced that the Digital Credential Wallet (hereafter referred to as the Digital Wallet) has entered its closed beta phase and could be officially launched as early as the end of the year. A press conference showcased real-world use cases and addressed common misconceptions, prompting the question: “Why wasn’t such a useful tool introduced earlier?”

Picking Up Packages at Convenience Stores

In daily life, we often need to present identification—sometimes to prove eligibility (e.g., student status), and other times to verify identity (e.g., borrowing books). However, despite these different needs, we have only one method: showing a physical document. The Digital Wallet introduces a new way to present credentials.

At the press conference, the Ministry of Digital Affairs displayed a long list of physical IDs, highlighting a common pain point: "These are the various documents people carry with them every day. We can all agree it's inconvenient." In the future, with the Digital Wallet, people will only need to bring their smartphones—because all their credentials will already be stored inside.

The Ministry of Digital Affairs released a video demonstrating how the Digital Wallet can be used to present credentials when picking up packages at convenience stores or collecting medication at pharmacies. The process is simple: scan a QR code, select the information you want to disclose, and submit it.

Every time I pick up a package at a convenience store and the clerk asks for an ID, I hesitate for a moment, wondering which one to use to avoid revealing too much personal information. Most clerks only glance at it briefly, but occasionally, I encounter someone who scrutinizes it more carefully. Of course, I could cover specific fields with my finger before showing the ID, but if it's a photocopy or an uploaded digital file, there’s no real way to protect my data.

Buying tickets is another situation where ID verification is required. In the future, when purchasing a senior citizen ticket, you won’t need to show your entire ID card—you’ll be able to use the Digital Wallet to prove both nationality and age.

The key feature of the Digital Wallet is selective disclosure, allowing users to precisely control what information they share. However, the moment people hear that this is yet another government-issued app, enthusiasm might fade. Physical wallets are already stuffed with paper IDs, and now smartphones are becoming cluttered with a growing number of government apps.

The good news is that the Digital Wallet follows the W3C international standard, breaking away from the "one document, one app" model. Similar to a USB port, it will support credentials issued by different organizations, as long as they meet international standards.

Digital Islands

The current state of digital identity is as chaotic as the pre-USB era—when drawers were filled with different charging cables, and no one could remember which one fit which device. TaipeiPASS has the Taipei Card, the NHI Express app has the National Health Insurance Card, and department stores have their own membership cards. These systems remain separate because there’s no universal standard to unify them.

This lack of interoperability causes many inconveniences. For example, convenience stores typically do not accept digital National Health Insurance (NHI) cards for identity verification. Since convenience stores are not under the jurisdiction of the National Health Insurance Administration, they have no way to verify the authenticity of an NHI card—what if it’s a fake? Taipei City’s Commissioner of Information Technology highlighted this issue at a press conference:"Taipei residents can obtain a Taipei Card through the TaipeiPASS app, but once they leave Taipei, it becomes useless because different counties and cities use separate systems that don’t communicate with each other."

Without a reliable way to verify the authenticity of digital credentials, the risks of forgery and fraud increase. The good news is that the Ministry of Digital Affairs (MODA) has already started discussions with convenience store chains. In the future, it may be possible to pick up packages simply by presenting a digital NHI card or even a Taipei Card.

The key breakthrough of the Digital Wallet is not just its technical development—it’s also the fact that MODA successfully convinced both credential issuers and verifiers to adopt a unified international standard. This not only makes credential management more convenient for the public but also significantly improves authentication security:

The Digital Wallet follows the Verifiable Credential (VC) standard established by the World Wide Web Consortium (W3C). Each of your digital credentials is cryptographically signed by the issuing authority and sent directly to your device. When using a credential, there’s no need to connect to the issuing authority every time—others can verify its authenticity instantly. This reduces the risks of data leakage and government surveillance.

Traditionally, verifying a digital credential was like making a phone call—the verifier had to connect directly to the issuing authority. Convenience stores cannot verify digital NHI cards simply because they don’t have a “hotline” connection with the National Health Insurance Administration. Now, imagine if the NHI Administration had to establish hotlines with every store in Taiwan—chaos would ensue.

The Digital Wallet introduces a different verification method—one that works like checking a watermark on a banknote. Verifiers don’t need to connect directly with issuers; instead, cryptographic techniques confirm the authenticity of a credential. A blockchain-based trust registry can then verify that the credential was issued by the legitimate National Health Insurance Administration—not by some random breakfast shop called “Jiàn Bǎo Shǔ” (a pun on the Chinese name of the NHI Administration). (Apologies for the wordplay!)

Many government agencies participating in the Digital Wallet project already issue digital credentials. These include the Ministry of Labor’s technician certification and the Ministry of the Interior’s Citizen Digital Certificate.

The Citizen Digital Certificate is currently used primarily for tax filing, making it fairly limited in use. However, if it could be stored inside the Digital Wallet, it would become far more practical. MODA provided an example: In the future, when booking a restaurant, customers might be able to use their Citizen Digital Certificate to make a reservation. Then, upon arrival, they could simply scan a QR code to check in. This represents an unprecedented model of open collaboration in digital identity.

Features like selective disclosure and interoperability across applications are tangible benefits that users can immediately experience. However, the most significant impact of the Digital Wallet is how it revolutionizes identity verification and its traditional hierarchy. Instead of registering personal data with different platforms, users will request credentials from various institutions and businesses, storing them in their own Digital Wallet. Eventually, each individual can build their own verifiable digital identity using these credentials. For Taiwanese people, this shift is particularly crucial.

Self-Sovereign Identity

Our digital identities are currently managed by different platforms and institutions.

• Social media platforms track our interests and preferences.
• E-commerce platforms store our shopping habits.
• Government agencies maintain official records.

However, companies shutting down is a common occurrence, and governments are not immune to change. The management of one’s digital footprint should be self-sovereign, rather than dependent on centralized platforms. This philosophy aligns with the core principles of cryptocurrency.

Last year, China launched its real-name decentralized identity (DID) system, RealDID 3. On the surface, it was marketed as a decentralized digital identity solution aimed at enhancing user privacy. In reality, however, it simply shifted control of user data from corporations to the government, effectively creating a "national login system. 4" In contrast, Taiwan’s Digital Wallet respects personal digital sovereignty, ensuring that individuals retain full controlover their own digital credentials.

The Digital Wallet stores credentials directly on users’ devices rather than in a centralized government database—just like carrying physical ID cards. This design ensures that even if government systems are hacked, users’ personal data won't be compromised in bulk. However, a question was raised during the press conference: "In the future, will people be able to use their digital NHI card in the Digital Wallet to make medical appointments?"

The answer is no, not yet. In the short term, the Digital Wallet will only be used for presenting digital credentials in simpler scenarios, such as picking up packages at convenience stores. Making medical appointments, however, involves complex interactions with the National Health Insurance (NHI) system, which cannot be integrated overnight. At its initial stage, the Digital Wallet is best suited for eligibility verification, such as: Confirming legal age, holding a valid driver’s license, and qualifying for student or senior discounts. Only when the general public finds it useful and convenient will there be enough public support to expand the Digital Wallet's integration with more complex systems.

One major missed opportunity at the press conference was that the Ministry of Digital Affairs (MODA) made no mention of the crucial role of blockchain in the Digital Wallet. They also failed to specify which blockchain they are using (surely they wouldn’t build their own low-traffic "mosquito chain," would they?).

The only technical explanation on their website states:

"We record the trust list—a list of trusted credential issuers—on the blockchain, ensuring that it is permanently fixed, like being engraved on a stone tablet, preventing anyone from tampering with or falsifying it."

If the trust list were to be tampered with, convenience stores might mistakenly accept a membership card from a breakfast shop called "Jian Bao Shu" as an official National Health Insurance (NHI) card issued by the Ministry of Health and Welfare. Storing the trust list on a centralized server would come with several risks. If the server were attacked, the entire verification system could collapse. Every query would leave unnecessary digital footprints, raising privacy concerns. Using blockchain is the best technical solution—although from a political standpoint, it may not be as simple.

MODA has also announced plans to integrate Zero-Knowledge Proof (ZKP) technology in the future. This means that users would be able to prove their eligibility (e.g., being over 18) without revealing any additional personal information such as their full birthdate. The application I’m most excited about? Renting a car in Okinawa could become effortless—no more visits to the Motor Vehicles Office to apply for a Japanese-translated driver’s license. With a ZKP credential from the Digital Wallet, you could simply prove your driving eligibility and hit the road! 🚗

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1. MODA Introduces Taiwan’s DID: No New ID Cards! Building a Verifiable Identity with a Digital Wallet
2. The Shortcut to Digital Identity is Digital Surveillance! How Taiwan’s DID Takes the Long Way to Protect Privacy – ft. MODA’s Huang Dou Ni
3. China Rolls Out Real-Name DID: Replacing Social Logins with National Logins, and Why W3C Standards Aren’t a Silver Bullet – ft. Independent Software Developer Xiao Zhu
4. China’s Real-Name DID: Upgrading Social Logins to National Logins