An In-Depth Guide to Understanding DIDs

DIDs, short for decentralized identifiers, are a fundamental building block of web3. In simplest terms, they can be defined as identity hubs through which a user or entity can control their digital identity. DIDs unlock many use cases and allow users to enjoy better control over their online identities. Read on as we explore DIDs and their evolution, the actions they support, some famous use cases, and how Arcana is leveraging them for identity and access control in our decentralized storage network.

What are DIDs?

According to W3C, DIDs are defined as a “new type of identifier that enables verifiable, decentralized digital identity.” But to better understand what DIDs are, it is worth looking into why they were conceived in the first place.

Various centralized organizations issue unique identifiers, from social security numbers to driver’s licenses. While these identifiers belong to an individual, they are not under the control of the said individual. Instead, they are under the control of the issuing organization. Moreover, these identifiers issued by various organizations or bodies are not accepted everywhere and aren’t issued with compatibility as a priority. In many cases, unique identifiers issued by the government, for instance, end up jeopardizing users’ privacy. Even when the internet was conceived, it had no inherent identity layer. As a result, websites and web apps took it upon themselves to do identity and access management. Today, each individual has to juggle tens of passwords to maintain their digital identity.

DIDs, on the other hand, bring a significant paradigm shift in how digital identities and unique identifiers are managed. Now, users can generate individual identities with systems they trust and with greater control. Ownership is then proved through cryptographic mechanisms such as digital signatures. But it doesn’t end here. DIDs are compatible with most identifier systems and can be further customized to suit a particular use case. We at Arcana also leverage DIDs for our use cases– learn more about it in a later section.

To summarize, DIDs are digital identifiers that refer to any subject. Be it a person, entity, organization, or data, among others. DIDs have been designed with several goals: decentralization, control, security, discoverability, and portability.

Types of Actions Supported by DIDs

Before we explore the various actions that DIDs support, let us understand the basic architecture of DIDs. Three entities control the activities of DIDs– the controller, relying on the party, and the subject. The controller is responsible for creating and maintaining the subject’s decentralized id. In contrast, the relying party will use the DID as an identifier for any transactions or interactions involving the subject. It is worth noting that the relying party and the controller could be either an interactive system or individual(s).

Moving on, here are some of the actions that DIDs support. We have listed only four out of the 11 activities they support. For the complete list, you can check this link here.

Create: Through public-private vital pairs, controllers create a decentralized identifier (DID) and bind it with the identifier using cryptography.

Verify Signature: The cryptographic material and proofs in a DID document are used by relying on parties to verify the digital signature of a DID.

Recover: Through a few methods, the control of a DID can be recovered even if the cryptographic materials in the DID document are lost.

Revoke: In cases where a DID should be deactivated, the controller can revoke it so that authentication processes no longer work.

Use Cases of DIDs

We explore three good use cases of DIDs, as mentioned in great depth by the W3C. If you want to learn more about these use cases in detail, including the challenges of implementing DIDs, check this link.

Decentralized Identifiers for Enterprise Use

Organizations, both large and small, use a plethora of identifiers for several use cases. Not only is managing these identifiers a massive challenge for most enterprises but mismanagement or poor practices can also lead to security threats. Consider employee ids, for instance. Instead of relying on an external agency to control the unique identifiers of each employee, which in turn may be connected to several security and data access privileges, enterprises can leverage DIDs to create identifiers that are more portable and backed by cryptography.

Permanent Credentials (Educational Degrees)

Credentials such as educational degrees are life-long documents that are heavily relied upon by many enterprises for employment purposes. With DIDs, degree certificates can be issued digitally with cryptographic material assigned to each document. This makes it incredibly easy to verify the authenticity and validity of whom the degree or a certain educational credential belongs to.

Healthcare Prescriptions

While hospital and patient data is being stored digitally across several developed nations, many countries still rely on paper-based prescriptions. As a result, there isn’t an all-inclusive, digital repository of patient prescriptions. By leveraging DIDs, each drug prescription could be assigned with a verifiable credential that can be accessed by patients and is linked to their online database. Doing so can offer patients a seamless and hassle-free experience as they can access all their past prescriptions, reports, and data in one place.

How Arcana Leverages DIDs

Arcana primarily leverages DIDs for facilitating decentralized storage and managing access control of the files uploaded to the Arcana Store. Each file uploaded to our decentralized storage network gets automatically assigned with a DID. Doing so helps us keep track of all the operations on the file made by its owner or user(s) with access to the file.


DIDs are a significant innovation in the realm of privacy and user sovereignty. They encourage user-driven control and pave the way for easily provable and publicly resolvable identifiers. What’s unique about DIDs is that they combine the best of most identity systems and are backed by cryptography.

You can learn more about DIDs, their architecture, and their inner workings by visiting the pages listed below:


About Arcana Network

Arcana is Web3 infra for devs to launch and scale apps through its Auth, Store, and Access SDKs. Web3 apps use Arcana’s SDK to authenticate users with Social and Passwordless Auth and create non-custodial wallets, Store Encrypted/Unencrypted Data, and Manage Access. Built for Ethereum and EVM-based chains, with Arcana’s privacy stack, developers can build secure and privacy-preserving apps with a seamless user experience.

Arcana has raised 2.7Mn USD from some of the leading investors and founders in the ecosystem, such as Balaji Srinivasan, Founders of Polygon, Woodstock, Republic Crypto, and Digital Currency Group.

Watch out for Arcana’s upcoming Mainnet in December 2022. Want to know more about our Mainnet features? Book a demo.

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