title_body: How does Atala Prism work?
upvoted_answer: Its well known that Atala PRISM allows people to deal with Decentralized Identifiers (DIDs) and Verifiable Credentials (VC), this is a simplified version on how it could work, which should give you a better idea.
  Let's take Cardano as a black-box that allow us posting data by leveraging the transaction metadata, which gives the distributed consensus (to make sure that an event occurred at a given time) and network dissemination (to be able to get the data distributed).
  DIDs are known to have public keys attached, which means that whoever controls the corresponding private keys, controls the DID, we can define some events about a DID, like:
  
  DID created
  DID updated (key added/rotated/revoked, etc)
  
  By using those events, we can define the following:
  
  The way to serialize an event to store it in the transaction metadata.
  The validity criteria to check whether a new event is valid given the existing events (digital signatures and hashes involved).
  
  Until now, we have defined a protocol that allows posting events to Cardano, as well as to compute the current state given the existing events in Cardano, implementing such protocol would require an application that:
  
  Provides an API to submit new events to the Cardano network.
  Runs a process that pulls transactions from the Cardano network, looking for the defined events, validates and applies the events when possible (computing a new state).
  Provides an API to query for the current state, for our example, it would mean being able to query which DIDs exists and each DID's state.
  
  For PRISM, there is a similar protocol defined with a different set of possible events, including how to deal with credentials.