Decentralized Identity Verification
Self-sovereign identity that puts users in control of their credentials while meeting KYC/AML requirements
The Challenge
Financial institutions spend an average of $60 million annually on KYC/AML compliance, yet customers must repeatedly submit the same identity documents to every new service provider they onboard with. Centralized identity databases create honeypot targets for attackers — a single breach can expose millions of individuals' personal data simultaneously.
Cross-border identity verification is particularly painful, with inconsistent document standards, slow manual review processes, and no interoperability between national identity systems. Customers lack control over who accesses their personal information, how long it is retained, and whether it is shared with third parties without explicit consent.
Our Solution
MicrocosmWorks can build a self-sovereign identity platform based on W3C Decentralized
Identifiers (DIDs) and Verifiable Credentials (VCs) that fundamentally restructures the trust model for identity verification. Users hold their own credentials in a secure mobile wallet and selectively disclose only the specific claims a verifier needs — proving age without revealing birthdate, or confirming accreditation without sharing financial details.
Issuers such as banks, governments, and universities publish credential schemas and revocation registries on-chain, while the actual personal data never touches the blockchain.
The platform provides fintech organizations with a compliant KYC/AML verification flow that is faster, cheaper, and more privacy-preserving than centralized alternatives.
System Architecture
The architecture follows the trust triangle model with distinct Issuer, Holder, and
Verifier roles connected through a shared DID registry on a public blockchain. A DID resolver layer abstracts multi-method support (did:ethr, did:web, did:key) allowing interoperability with existing identity ecosystems and emerging government digital identity programs. Zero-knowledge proof circuits enable selective disclosure and predicate proofs, letting users prove statements about their credentials without revealing underlying data.
- DID Registry & Resolver: On-chain DID document registry with multi-method resolution supporting did:ethr, did:web, and did:key, providing a universal namespace for
decentralized identifiers and public key discovery
- Credential Issuance Service: API and admin dashboard for trusted issuers to define credential schemas, issue signed verifiable credentials, manage revocation through
on-chain status lists, and monitor issuance analytics
- Mobile Identity Wallet: Native mobile application with secure enclave key storage, biometric authentication, credential management, selective disclosure interface, and
backup/recovery using social recovery or seed phrases
- Verification Gateway: Stateless verification service that validates credential signatures, checks revocation status, verifies zero-knowledge proofs, and returns
structured compliance decisions to relying parties in real-time
Technology Stack
| Layer | Technologies |
|---|---|
| Backend | Rust (DID resolver), Node.js (issuance/verification APIs), gRPC, Express.js |
| AI / ML | Document authenticity detection (CNN), liveness detection, OCR (Tesseract) |
| Frontend | React Native (mobile wallet), Next.js (issuer/verifier dashboards) |
| Database | PostgreSQL (off-chain metadata), Redis (session/nonce cache), Ethereum (DID registry) |
| Infrastructure | AWS KMS, HashiCorp Vault, Ethereum L2 (Polygon PoS), Docker, Kubernetes |
Implementation Approach
The project begins with DID registry contract deployment and resolver service development
(weeks 1-4), establishing the foundational identity layer. Weeks 5-8 focus on the credential issuance service and mobile wallet development in parallel, including secure enclave integration and backup/recovery flows. The verification gateway and zero-knowledge proof circuits are built during weeks 9-11, followed by end-to-end integration testing, security auditing, and compliance validation with regulatory advisors in weeks 12-14.
Pilot deployment targets two issuer organizations and one verifier for initial validation.
Expected Impact
| Metric | Improvement | Detail |
|---|---|---|
| KYC Onboarding Time | 80% reduction | Reusable verified credentials reduce repeat KYC from days to a single wallet-based consent interaction |
| Compliance Cost | 65% lower | Shared verification infrastructure and reusable credentials dramatically cut per-customer compliance spend |
| Data Breach Exposure | Near zero | No centralized PII storage means there is no honeypot to breach — credentials live in user wallets only |
| Cross-Border Verification | 10x faster | Standardized verifiable credentials eliminate manual document translation and foreign authority validation |
| User Privacy Score | +90% | Selective disclosure and zero-knowledge proofs ensure minimum necessary data sharing for every interaction |
| Credential Reuse Rate | 85%+ | Once issued, a single credential satisfies verification requests across all participating relying parties |
Related Services
- Blockchain Development — DID registry contracts, credential schema standards, and on-chain revocation infrastructure
- Cybersecurity — Cryptographic key management, secure enclave integration, and zero-knowledge proof circuit design
- Digital Consulting — Regulatory compliance mapping, identity ecosystem strategy, and stakeholder trust framework design
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