AnonCreds is a new Hyperledger project that enables privacy-enhanced verifiable credentials.

The technology itself is not new, as it was originally part of Hyperledger Indy, the digital identity registry project. However, it has now been separated from Indy so that it can be used for credentials verifiable in ledgers like Hyperledger Fabric or Ethereum-based Hyperledger Besu, or others.

The core concept behind AnonCreds, Indy, and Project Aries is to allow users to share identity data with others, but only when necessary. For example, in a bar, someone can prove that they are of drinking age and perhaps share an image linked to the badge without revealing their name and address.

AnonCreds, which stands for Anonymous Credentials, uses Zero Knowledge Proof (ZKP) encryption to enable these types of targeted disclosures.

The concept might work well for some applications and perhaps less so for others. If a financial process involves Know Your Customer compliance, a lot of data may need to be shared, and certainly your name.

In the digital identity sector, AnonCreds has attracted a bit of controversy.

AnonCreds predates and is not fully compliant with the W3C Verifiable Credentials standard. It also uses cryptography that is not approved by NIST. However, some of the criticism has been refuted (and here). And the fact that there are 25 project sponsors shows the extent of their support.

At the same time, the AnonCreds project seems keen to revise the signature (cryptography) scheme and, in the future, support credential submissions using the W3C data model.

As outsiders, we have seen divisions in the digital identity sector on multiple issues. However, given the importance of digital identity, healthy discussions are essential. While the desire for interoperability is important, there is an argument that privacy is more so. And the groups behind AnonCreds are some of the more serious about privacy protection.