For investors across the United States looking for a chance to invest in cryptocurrencies, Coinbase is one of the most widely used options. Coinbase allows users to transfer their money from their bank account or credit card and trade currencies on the platform. Currently, exchanges are offered for Bitcoin, Ethereum and Litecoin, three of the biggest cryptocurrencies. Beyond offering these services to investors, Coinbase is also making some business moves of its own to expand their operations. Most recently, Coinbase doubled-down on the future of digital identification.
By definition, the concept of digital identification is a method by which personal data is owned by an individual and can be shared by that individual at their discretion. It can also be revoked at that same discretion. In most applications, the concept is tied with blockchain technology. On Wednesday, Coinbase announced the addition of five new employees from a San Francisco startup to their staff in order to push digital identification. They join Coinbase’s Identity team, which is an engineering unit to help the company explore the decentralized identify concept across the services Coinbase currently provides.
In the mind of Coinbase, the concept isn’t that complex. The company envisions a point where personal data must simply be verified by a third-party entity, like a government agency or crypto miner, and then that information would be retained securely by the party using it. In this sense, a person would no longer need to send their Social Security Number or Driver’s License number to a company to show who they are who they say they are. Rather, the Social Security Administration could place a stamp of approval on the blockchain for this person that could be verified if needed. Thus, the user would not have to put sensitive information out there, limiting the possibilities of identity theft and unneeded sharing of information.
While the concept itself is efficient, there are still some shortcomings that need to be figured out, which is one thing Coinbase is actively seeking to do. If personal information were stored on a blockchain, the encryption which keeps their data safe would need to be managed. Furthermore, a system would need to be in place if the encryption was lost, similar to a forgotten password. In addition, if one spot holds an individual’s complete information, it could be a huge security risk. In spite of the anonymity efforts, there have still been instances in which people have been able to adequately trace blockchain transactions. As users want to manage their identity, they would likely push it to a platform that does it for them, but that again could lead to a security risk.
One thing is currently clear, no matter how fast the concepts and technology are developed for blockchain, the utility of it by everyday users needs to continue to be pushed in order to really take the ideas off the ground. Before people start putting their info on a blockchain, they’ll need a real reason to do so in the first place.