Coinbase increases focus on digital identity solutions with Distributed Systems acquisition

Cryptocurrency startup Coinbase has acquired Distributed Systems, a digital identity startup, TechCrunch reported.

Founded in 2015, Distributed Systems raised $1.7 million in a seed funding round in 2017 led by Floodgate. The startup was also considering raising $4-$8 million round this year.

The acquisition comes as Coinbase plans to build an identity platform for decentralized app developers to simplify the process of signing up and connecting to crypto wallets for users.

“Distributed Systems is an incredibly thoughtful team that has been working on decentralized identity solutions. With their work on the Clear Protocol and GraphQL, Nikhil, Alex, and the rest of the team have gotten their hands dirty in the technical detail of using blockchains to improve how identities mesh with digital products,” Coinbase’s PM for identity B. Byrne said. “We believe decentralized identity systems represent a transformative shift in our relationship with technology, and we can’t wait to work on these opportunities together at Coinbase.”

Distributed Systems CEO Nikhil Srinivasan and co-founder Alex Kern are forming a new decentralized identity team that will work on a “Login with Coinbase” product. Three other members – Andrew Gold, Jackson Callaway, and Rohith Varanasi – will work with Coinbase’s Toshi decentralized mobile browser team.

The “Login with Coinbase” or similar product will be a software development kit (SDK) that could be integrated with other apps. App developers seeking to improve the conversions on their signups could leverage the solution, instead of requiring users to go through the hassles involved in creating new accounts and connecting their crypto wallets for making payments.

Coinbase is seeking to decentralize online identities, allowing users to connect to decentralized apps while retaining control,

“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,” Byrne said.