Coinbase Acquires Digital Identity Startup Distributed Systems
San Francisco-based exchange Coinbase is expanding its blockchain ecosystem to prepare for the onset of a regulated digital economy. To support its expansion efforts, Coinbase has acquired digital identity startup Distributed Systems.
Coinbase Doubles Down on Digital Identity
Coinbase, a digital asset exchange, has acquired digital identity startup Distributed Systems, according to a blog post released Aug. 15.
Founded in 2015, Distributed Systems is a decentralized identity solutions company working toward achieving an “open financial system for the world” through its identity standard for decentralized applications (dApps), called the Clear Protocol.
Under the terms of the agreement, Distributed System’s five-person team will merge with Coinbase and begin working on the company’s new Coinbase Wallet and “Login with Coinbase” product, which will allow dApp developers to easily integrate identity platforms for users to register and connect their crypto wallets.
CEO Nikhil Srinivasan and co-founder Alex Kern will head the new decentralized identity team at Coinbase.
Using distributed ledger technology (DLT), Coinbase hopes to empower users with control over their verifiable identities across various dApps in the blockchain ecosystem.
In the blog post, Coinbase Identity project manager B. Byrne wrote:
“Blockchain technology that powers cryptocurrencies offers a new way to let us all be ‘verified’ everywhere we go on the internet, feeling safer about our interactions with others and opening the door to the experiences that require trust.”
Adding to his statement, Byrne used American Social Security numbers as an example of fragile identity protection existent today:
“Every time you want to prove who you are with your SSN, you need to give away a copy of it. That copy has exactly the same power as the original, so when there’s a data breach with copies of your data it puts your identity at risk. A decentralized identity will let you prove that you own an identity, or that you have a relationship with the Social Security Administration, without making a copy of that identity.”
The exchange will take into consideration the aspects of anonymity, privacy and permanence while developing its own decentralized identity solutions, Byrnes said.
Through its recent acquisition, Coinbase appears to be positioning itself at the forefront of bridging user identity with the developing digital economy.
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