San Francisco cryptocurrency exchange giant Coinbase has acquired a local startup which offers decentralized identity solutions to help consolidate its login and verification processes.
The firm, Distributed Systems Inc, according to Coinbase project manager B Byrne, was selected by the exchange to utilize blockchain for verification purposes and, thereby, offer more safety to clients. He commented:
“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.”
Distributed Systems Inc, started in 2015, was established to develop an identity standard for Dapps called the Clear Protocol with the startup raising USD 1.7 million in its seed round. The company was about to start another round this year in the hope to raise between USD 4 million to USD 8 million until they struck the seal with Coinbase.
DS SEO Nikhil Srinivasan said that “no one really understood what we’re building” but added that once that Coinbase Ventures had seen the tech’s KYC potential, “they quickly tried to move to find a way to acquire us”.
With DS now on board, Byrne feels that a more secure proof of identity protocol can be established using the new company’s technology. He suggested that this would:
“…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.”
Coinbase plans to initiate the new system called “Login with Coinbase” with care, with user anonymity and privacy remaining a fundamental consideration of any changes it makes to its current verification system.
This is not the first time that Coinbase has acquired companies in order to enhance its operating performance, having added Keystone Capital Corp, Venovate Marketplace and Digital Wealth, in order to satisfy the US Securities and Exchange Commission (SEC) requirements for broker registration.
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