Leading cryptocurrency exchange Coinbase has announced the acquisition of Distributed Systems, a San Francisco-based startup that is working on decentralized identity solutions. As a part of the acquisition, the five-person team at Distributed Systems will join the group at Coinbase involved in building identity solutions. Coinbase did not reveal the terms of the deal.
Coinbase Acquires ID Startup, Distributed Systems
Coinbase, a leading cryptocurrency exchange, has announced the purchase of Distributed Systems, a San Francisco-based firm focused on decentralized identification solutions. As part of the transaction, the five-person Distributed Systems team will join Coinbase's department responsible for developing identification solutions. Coinbase did not disclose the specifics of the transaction.
Blockchain System Helps User Control Digital Identity
With advancements in technology, all important information on an individual may now be obtained on numerous internet portals and platforms. They contain information about their identities, jobs, hobbies, and even relationships. While digitalization has made crucial data points more accessible and shareable, it has also resulted in incidences of data theft and abuse. Amid rising worries about the security of users' personal data, blockchain-based solutions may let people construct their digital identities in a safe way while maintaining total control, eliminating any potential abuse. (See also: Blockchain May Make You—Not Equifax—The Owner of Your Data.)
The blockchain technology that underpins cryptocurrencies enables a novel, dependable, and secure means of user authentication, keeping all transactions and interactions safe in the digital realm while also assisting in the maintenance of vital trust among the interacting parties.
Coinbase Identity project manager B Byrne compares it to a Social Security number, stating that the "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." Byrne emphasizes the advantages of a safe, decentralized digital identity, saying, "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." (See also: How Blockchain Technology Can Prevent Election Fraud.)
Acquisition to Help Coinbase Build Digital Id System
As Coinbase works to create the financial environment around cryptocurrencies and associated transactions in order to bring them into the mainstream, creating a safe means to host digital identities becomes more crucial. At the same time, several cryptocurrencies prioritize privacy and anonymity. A delicate balance must be struck between anonymity, privacy, and immutability in the blockchain virtual world, while keeping transactions and identities transparent and safe. Coinbase intends to use the experience of Distributed Systems' team to work on the digitized identification effort and will investigate its integration with other digital goods.