Coinbase Acquires Digital Identity Startup to Create Solutions Over Blockchain

BTC Wires: This Wednesday, Coinbase announced that it has acquired a digital identity startup called Distributed Systems from San Francisco in order to work on developing decentralised identity solutions. B Byrne, the manager of Coinbase’s Identity project, blogged about the initiative, writing that Decentralised Systems had already been exploring how to create decentralised identity tools for a while now. A five-member team from the partner startup will be working in close collaboration with a unit of Coinbase to try and develop solutions to ensure decentralised identity on digital platforms.

This will make use of blockchain technology because this new form of establishing networks can make sure users retain complete control over their own digital identities. This guarantees the safekeeping of all their personal information, including all aspects of the digital footprints they leave behind. Byrne detailed how this could be applied to Social Security Numbers held by people in the United States. Usually, when people have to prove their identity with reference to the Social Security Scheme, they are required to make a copy of their valuable information. This copy has the potential to be used pretty much like the original is normally used and this can threaten the security of the user in question. By using a decentralised identity that runs on blockchain, a user can make sure he gets the job done without having to compromise the safety of his data. Interestingly, cryptography and blockchain can make use of zero-knowledge proofs to make sure proofs are supplied without revealing data and the solution Coinbase envisages might be similar to that in practice.

Although Byrne uses the example of Social Security Numbers, the technology can aid customers in a variety of fields, ranging from their Facebook pictures to more personal documents such as the passport. Although the crypto world is rather excited at the possibility of a new functional solution to safeguard our identities, Coinbase is in no hurry to complete the work and apply the solutions just yet. According to what Byrne wrote in his blog post, the company is yet to mull over how and where they can possibly apply this technology to get the best possible results. The secure online buying platform still needs to go over certain issues concerning the extent of anonymity and privacy possible over blockchain, especially given the fact that all records created over blockchain are largely immutable in nature.

Dmitriy

Having majored in Social Psychology and Economics, I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. I write financial articles for various international media. I also hold the position of a Chief Analyst at RoboForex.