The popular cryptocurrency wallet service has recently purchased Distributed Systems Inc, a blockchain startup that develops decentralized solutions to identity verification. Distributed Systems was formed in 2015 and began experimenting with an identity solution for dApps called Clear Protocol. Following a successful fundraising venture last year that saw the company bring in $1.7 million, this year it began negotiations with Coinbase.
In a post on its blog, Coinbase Identity project manager Brennan Byrne outlines plans to use Distributed Systems expertise to develop new methods for identity validation in an open financial system.
The new developments will be intended to give users control over their privacy when being verified online. Currently, a common method of identity verification is sending copies of passports over the internet – a highly insecure practice. With blockchain technology, identity can be verified in a secure and encrypted manner without needing to share any private details.
Coinbase hopes to leverage the technology provided by Distributed Systems to solve this problem and provide its customers with a secure identification procedure. Recent developments in Europe such as the General Data Protection Regulation (GDPR) show a growing concern amongst the public for adequate data protection.
This new acquisition is just one of many for Coinbase, which recently purchased three U.S. financial corporations in order to solidify its position as an SEC-regulated broker-dealer.
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