Microsoft has created a buzzword to go with its age-verification plan: "digital playgrounds," sites where kids use digital ID cards to hang out in adult-free places online.

It's part of Microsoft's Trustworthy Computing initiative, an industry consortium aimed at tackling the Internet identity problem. CNET reports that the challenge is "how to make the Internet safer not just for children, but also for adults wanting to conduct business, make transactions, and communicate with the confidence that the people they are interacting with really are who they say they are."

What makes it so tough to solve is the need to authenticate people's identities without jeopardizing their privacy -- especially children's, whose personal info is protected by US federal law.

CNET says that in Microsoft's scenario for children, "digital identity 'cards,' or credentials, could be based on either national identity documents created at birth or on identity documents schools use to determine age and identity for school registration, with parental permission. The data could be limited to age and proof of authenticity, and the credentials should be encrypted and require use of PIN numbers."

Microsoft isn't the only company interested in this topic.  Internet News points out that dozens of other companies and groups will be presenting their proposed solutions to the Internet Safety Task Force later this month.  And my colleague, Larry Magid, recently wrote here at Yahoo! Kids Parents about a proposed information or "I-Card."