Cheqd, a privacy-preserving Web3 payments and trust infrastructure layer provider, today announced the launch of its new solution for portable, decentralized identity and reputation that can be used across different communities known as Creds.

The company uses blockchain technology to allow users to control their own identity using something called self-sovereign identity, where individual users control all of their data and personal information, and only share what they want to share with others on a need-to-know basis for verification. This allows users greater control of their privacy and greater portability of their own identity.

Blockchain technology is the basis of Web3, otherwise known as the decentralized web, which has given rise to a vast number of communities built around cryptocurrencies such as bitcoin, Ethereum and games that use crypto tokens as rewards. For users, there is always the looming threat of scams and the chance that they can lose their hard-earned tokens. And communities want to know that they’re engaging with real people. That’s the value of a privately held identity.

“More and more organizations are looking to become community-focused to take advantage of the rising community economy,” said Eduardo Hotta, head of marketing and community at Cheqd. “As an example, it’s preferable to have a smaller number of real active community members, or superfans, than to have a group with thousands of bots.”

The benefit of Creds is that people can use them to build a profile that’s connected to their own blockchain digital wallet, which allows them to build a reputation within any community and then share that information with anyone they choose — but only with their permission. Although Creds themselves are based on publicly available blockchain technology, the information they secure is not public, which means that users’ private data is safe.

Communities, events, games and websites can use Creds to reward attendance by issuing them to participants, and users can then use them to unlock benefits similar to nonfungible tokens, another type of blockchain-enabled crypto asset. The difference is that with Creds, users will also have their identity attached to Creds, proving that they are whom they say they are and their connection to the community. A user’s Creds could then be used to unlock benefits such as whitelisting them for VIP events, unlocking sections of forums, providing coupons or more.

For example, an event could issue a Cred credential to an attendee that states that a person joined the event. That can be stored in the person’s blockchain wallet, then used as part of the profile or revealed to others as part of bragging rights. The same could be used for online communities with their first users, supporters, donors and others, in order to provide them with rewards and kudos that they can share privately or publicly in order to enhance their reputations.

Cheqd developed Creds as an alternative to producing nonfungible tokens, or NFTs, because they are minted publicly on the blockchain and tied directly to user wallets, which can deanonymize them. NFTs are a type of cryptographic token that can represent a type of digital asset, such as an image, video game item or memorabilia. Another technology, known as soulbound tokens, or SBTs, operates similarly to NFTs but cannot be exchanged between users.

“Creds offers a privacy-preserving alternative to the surveillance-enabling tech of SBTs and NFTs where you have little control over your privacy,” said Fraser Edwards, chief executive and co-founder of Cheqd explained. “Creds are collectible, portable, secure and verifiable; it has all the best things that the NFT and SBT have with the addition of everything else they are missing.”

Decentralized identity has been explored by Web3 companies as a mechanism for single sign-on as well as a portable reputation over the years. Single sign-on is similar to using a centralized account with Facebook, Google or Microsoft to log into multiple different web pages or accounts, except with a decentralized identity, it means that no centralized authority controls that information.

Companies such as Spruce Systems Inc., Wipro Lab45 from Wipro Ltd. and Unstoppable Domains have all built decentralized identity solutions. Identity solutions startup Carv also created a reputation-based solution for Web3 gaming and applications.

Image: Cheqd