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Coinbase acquires Distributed Systems to build ‘Login with Coinbase’

Coinbase wants to be Facebook Connect for crypto. The blockchain giant plans to develop ‘Login with Coinbase’ or a similar identity platform for decentralized app developers to make it much easier for users to sign up and connect their crypto wallets. To fuel that platform, today Coinbase announced it has acquired Distributed Systems, a startup founded last year that was building identity standard for dApps called the Clear Protocol.

The five-person Distributed Systems team and its technology will join Coinbase. Three of the team members will work with Coinbase’s Toshi decentralized mobile browser team, while CEO Nikhil Srinivasan and one other co-founder are forming the new decentralized identity team that will work on the ‘Login with Coinbase’ product. They’ll be building it atop the “know your customer” anti-money laundering data Coinbase has on its 20 million customers. Srinivasan tells me the goal is to figure out “How can we allow that really rich identity data to enable a new class of applications?”

Distributed Systems had raised a $1.7 million seed round last year led by Floodgate and was considering raising a $4 million to $8 million round this summer. But Srinivasan says “No one really understood what we’re building”, and it wanted a partner with KYC data. It began talking to Coinbase Ventures about an investment, but after they saw Distributed Systems’ progress and vision, “they quickly tried to move to find a way to acquire us.”

Distributed Systems began to hold acquisition talks, and the CEO tells me it was deciding between going to “Facebook, or Robinhood, or Binance or Coinbase”. Coinbase “were able to convince us they were making big bets, weaving identity across their products.” The financial terms of the deal weren’t disclosed.

Coinbase’s plan to roll out the ‘Login with Coinbase’ platform is an SDK that others apps could integrate, says Srinivasan. That mimics the way Facebook colonized the web with its SDK and login buttons that splashed its brand in front of tons of new and existing users. This made turned Facebook into a fundamental identity utility beyond its social network.

Developers eager to improve conversions on their sign up flow could turn to Coinbase instead of requiring users to set up whole new accounts and deal with crypto-specific headaches of complicated keys and procedures for connecting their wallet to make payments. One prominent dApp developer told me yesterday that forcing users to set up the MetaMask browser extension for identity was the part of their signup flow where they’re losing the most people.

Coinbase CEO Brian Armstrong confirmed this morning that it’s working on an identity SDK. When Coinbase investor Garry Tan of Initialized Capital wrote that “The main issue preventing dApp adoption is lack of native SDK so you can just download a mobile app and a clean fiat to crypto in one clean UX. Still have to download a browser plugin and transfer Eth to Metamask for now Too much friction”, Armstrong replied “On it :)”

On it 🙂

— Brian Armstrong (@brian_armstrong) August 15, 2018

In effect, Coinbase and Distributed Systems could build a safer version of identity than we get offline. As soon as you give your social security number to someone or it gets stolen, it can be used anywhere without your consent and that leads to identity theft. Coinbase wants to build a vision of identity where you can 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” writes Coinbase’s PM for identity. “If you stretch your imagination a little further, you can imagine this applying to your photos, social media posts, and maybe one day your passport too.”

Considering Decentralized Systems and Coinbase are following the Facebook playbook, they may soon have competition from the social network. It’s spun up its own blockchain team and an identity and single sign-on platform for dApps is one of the products I think Facebook is most likely to build. But given Coinbase’s strong reputation in the blockchain industry and its massive head start in terms of registered crypto users, today’s acquisition well positions it to be how we connect our offline identity with the rising decentralized economy.

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Singular, a startup working to unify data for marketers, is announcing that it has raised $30 million in Series B funding. The company was founded by former Onavo executives, including Gadi Eliashiv, Eran Friedman and Susan Kuo — who now serve, respectively, as Singular’s CEO, CTO and COO. Eliashiv explained that Singular was created in response to “this trend of data explosion in the marketing stack,” which require marketers to pull data from hundreds or thousands of different systems. “Essentially what we see is the creation of this new category of marketing intelligence, where the complexity of the marketing stack has created the need for this layer that sits on top,” he said. “It doesn’t matter if you use a marketing cloud like Adobe that’s bundling five products together, at the end of the day, you need a layer on top on making sense of it, helping you make better decisions.” Eliashiv said Singular is able to go from a high-level dashboard summary for CMOs to “the finest level of detail.” He also noted that while the company is designed to integrate with existing marketing tools, it will “oftentimes displace smaller point solutions.” “Our principal is, it has to be relevant for data, meaning we’re never going to displace your ad-buying tool,” he added. “It’s not what we do. We’re an intelligence platform.” The idea of unifying marketing data is one that I hear a lot, but Eliashiv’s claims seem weightier when you see that Singular is already working with a number of big names, including Lyft, Yelp, Airbnb, Linkedin, Symantec, Zynga, Match and Twitter. Singular previously raised $20 million in funding. Norwest Venture Partners led the new round, with partner Scott Beechuk joining the board of directors. Beechuk told me that he’d been studying marketing analytics market for quite some time, and he argued, “There is something really unique and special about Singular. It’s the bridge between mobile, web and offline, all on a single platform.” “What you’re going to find is, there are going to be a lot of technologies that Singular replaces,” Beechuck continued. “Let’s say a CMO or [chief growth officer] has 300 different outlets where they are advertising … Everyone one of those systems tends to have their own analytics built in. The first thing Singular does, it replaces all of those analytics systems with a single pane of glass.” General Catalyst, Method Capital, Telstra Ventures, Translink Capital and Thomvest also participated in the new funding.

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