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Coinbase (NASDAQ: COIN), the top cryptocurrency exchange in the US, has purchased a San Francisco-based startup that specializes in digital identity solutions. The company, Distributed Systems, will see its small team of personnel join a Coinbase unit that was created to develop the exchange’s own digital identity solutions. The platform could ultimately be strictly used by Coinbase, or it could be licensed out to any entity that maintains sensitive personal data.

Brennan “B” Byrnes, project manager for Coinbase Identity, announced the acquisition via a blog post, explaining that a blockchain implementation of a digital identity solution will provide greater security while giving individuals the ability to control how their personal data is used. As an example, he pointed to how the US Social Security Administration could benefit by the technology to protect citizens’ social security numbers.

Byrnes asserted, “Every time you want to prove who you are with your SSN, you need to give away a copy of it. That 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. 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.”

He also explained how the technology could be used for other technologies, stating, “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.”

Before being able to initiate a widespread rollout of any digital ID solution, explained Byrnes, Coinbase will need to discuss and resolve issues surrounding privacy, anonymity and blockchain’s immutability. He said that the company must be “deliberate about how and where we apply this technology.”

Distributed Systems was incorporated in 2015. It had a singular focus – the development of an identity standard for decentralized applications (Dapps) called Clear Protocol and raised $1.7 million last year during a seed round. The company had intended on raising an additional $4-8 million through another funding round this summer, but talks with Coinbase over an acquisition put that idea on the shelf.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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