This places all the trust in the institution that mints verifiable credentials. (or the institution + Auth0 if they use Auth0). This is good for use cases where you want to assert that an organization says something about you (e.g., you have a degree). It is not good for use cases where you want to assert that you say something (e.g., I voted for Blah, or I authorized this transfer).
If you lived in a crazy state like Florida, vaccinating at Walmart was the best way to get a credential for international travel. In the absence of federal action, countries like Israel recognized these credentials and airlines incorporated them into their ticketing workflow.