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Understanding Passkeys and Digital Credentials

As digital identity evolves, two key technologies are shaping the future of user authentication: passkeys and digital credentials. Both are designed to make online interactions more secure and user-friendly, but each serves a distinct purpose when exploring secure login solutions.

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Passkeys: Secure, Phishing-Resistant Authentication

Passkeys have emerged as an advanced alternative to traditional passwords by relying on cryptographic authentication. Supported by industry leaders like Apple, Google and Microsoft, passkeys are based on standards like FIDO2 and WebAuthn, offering users passwordless logins using biometrics or device PINs. The private key remains stored in secure hardware elements such as TPMs or Secure Enclave, meaning credentials never leave the device and are extremely resistant to phishing and credential theft.

For software developers, passkeys offer straightforward integration and improved security with reduced reliance on SMS OTPs or weak forms of multi-factor authentication. Product managers benefit from improved sign-up and login flow efficiency, resulting in better conversion rates and reduced friction in user journeys.

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Digital Credentials: Verified User Attributes and Privacy

Digital credentials, sometimes referred to as verifiable credentials, go a step beyond authentication by allowing users to prove specific information, such as their age, government-issued ID or professional qualifications, without exposing unnecessary personal data. These are stored in digital wallets and built on standards like W3C Verifiable Credentials and ISO mDocs.

When it comes to use cases such as KYC (Know Your Customer), AML (Anti-Money Laundering) or regulatory compliance, digital credentials enable organizations to request only the precise attributes required, with strong privacy controls in place. Users retain control of their data and can selectively disclose credentials when dealing with services like government portals, financial institutions or age-restricted platforms.

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Comparing Passkeys and Digital Credentials: Alignment and Differences

While both technologies use hardware-based cryptographic security, their primary focus differs. Passkeys are optimized for user authentication (proving “you are who you say you are” to access an account or app), while digital credentials focus on attestation (proving attributes about yourself with cryptographic proof from trusted sources).

Currently, passkeys enjoy widespread standardization and support, while digital credentials are still an emerging area, with evolving standards and growing adoption — especially in governmental settings and sectors with high compliance requirements.

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Best Practices: Integrating Passkeys and Digital Credentials

For most application scenarios, integrating passkeys delivers immediate wins in terms of phishing resistance, passwordless convenience and scalable security, making them a strong universal MFA or primary authentication method.

Developers can implement passkeys as the default login method for e-commerce, SaaS and financial platforms. In situations requiring higher assurance, such as onboarding or regulatory checks, digital credentials can supplement authentication by providing verifiable proof of identity or specific attributes. For certain flows, digital credentials can be requested after the initial login, minimizing friction for regular users.

A notable development on the horizon is the EU’s upcoming EUDI Wallet initiative, which will soon require services to accept wallet-based authentication and attribute sharing, potentially blending the strengths of both passkeys and digital credentials.

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Strategic Recommendations and Future Outlook

• Adopt passkeys broadly to replace traditional passwords and weak MFA methods.
• Add digital credential flows for onboarding or where regulatory or KYC needs demand higher assurance.
• Monitor evolving standards (like the Digital Credentials API) and trends in device binding and trust signals to stay future-proof.
• Leverage digital wallets for secure management and user-controlled sharing of both credentials and authentication keys.

Looking ahead, ongoing browser and operating system changes will increasingly unify passkey and digital credential experiences, driving convergence toward a more seamless, secure digital identity landscape.

Find out more and dive deeper into authentication trends and implementation recommendations at Corbado’s blog: https://www.corbado.com/blog/digital-credentials-passkeys