SC-900 Describe the capabilities of Microsoft Entra Practice Question
This SC-900 practice question tests your understanding of describe the capabilities of microsoft entra. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
You are deploying Microsoft Entra Verified ID to issue verifiable credentials for employee onboarding. Which component is required to issue credentials?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
A decentralized identifier (DID) for your organization
Microsoft Entra Verified ID requires a decentralized identifier (DID) for your organization to issue verifiable credentials. The DID serves as the cryptographic anchor that proves your organization's authority to issue credentials, as it is registered on a decentralized ledger (ION) and linked to your public keys. Without a DID, the verifiable credentials cannot be cryptographically signed and verified by relying parties.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
A custom application registered in Microsoft Entra ID
Why it's wrong here
While an app registration may be used, it is not the core requirement.
✓
A decentralized identifier (DID) for your organization
Why this is correct
The DID acts as the issuer identifier.
Related concept
Read the scenario before looking for a memorised answer.
✗
A blockchain node for the decentralized ledger
Why it's wrong here
Verified ID uses a consortium network, not a blockchain node you manage.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse the need for a custom app registration (Option B) as the core requirement, but the DID is the mandatory cryptographic identity anchor without which no credentials can be issued.
Detailed technical explanation
How to think about this question
Under the hood, the DID is created using the ION network, which is a layer-2 protocol built on Bitcoin's blockchain. The DID document contains the organization's public keys and service endpoints, enabling cryptographic signing of Verifiable Credentials using the W3C Verifiable Credentials Data Model. In a real-world scenario, the DID allows cross-organization trust without a central authority, as any verifier can resolve the DID to validate the issuer's signature.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this SC-900 question in full detail.
Describe the capabilities of Microsoft Entra — This question tests Describe the capabilities of Microsoft Entra — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: A decentralized identifier (DID) for your organization — Microsoft Entra Verified ID requires a decentralized identifier (DID) for your organization to issue verifiable credentials. The DID serves as the cryptographic anchor that proves your organization's authority to issue credentials, as it is registered on a decentralized ledger (ION) and linked to your public keys. Without a DID, the verifiable credentials cannot be cryptographically signed and verified by relying parties.
What should I do if I get this SC-900 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Question Discussion
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