This paper explores the concept of digital identity in the evolving landscape of Web 3.0, focusing on the development and implications of a novel authentication scheme using verifiable credentials. The background sets the stage by placing digital identity within the broad context of Web 3.0′s decentralized, blockchain-based internet, highlighting the transition from earlier web paradigms. The methods section outlines the theoretical framework and technologies employed, such as blockchain, smart contracts, and cryptographic algorithms. The results summarize the main findings, including the proposed authentication scheme’s ability to enhance user control, security, and privacy in digital interactions. Finally, the conclusions discuss the broader implications of this scheme for future online transactions and digital identity management, emphasizing the shift towards self-sovereignty and reduced reliance on centralized authorities.