In a significant development for the cryptocurrency space, Coinbase, one of the largest exchanges in the United States, announced the implementation of an innovative on-chain KYC (Know Your Customer) verification system. This move represents a major step towards integrating decentralized identity into the mainstream, a milestone in the history of the digital financial sector.
Last Thursday, Coinbase unveiled its new service, allowing more than 100 million users to validate their account and country credentials across the network. This unprecedented service is based on Coinbase’s own Layer 2 network, called Base, and uses the Ethereum Attestation Service, an open source standard. The aim is to ensure that checks are transparent and integrable, as emphasized by the exchange.
Introducing Coinbase verifications – Users can attest to account and country credentials onchain, all verified by Coinbase, now live for our 100M+ users at https://t.co/MhBwIpmwEv pic.twitter.com/gBuw7gmkw1
— Coinbase Cloud 🛡️📞 (@CoinbaseCloud) November 9, 2023
Interestingly, just one day after the product launched, Coinbase recorded more than 9,300 verifications. According to data from Dune Analytics, this represents around 15% of all verifications performed on the Ethereum Attestation Service. This significant number highlights the acceptance and effectiveness of the new system.
The concept of decentralized identity (DID), essential to the evolution of Web3, has been a long-pursued objective in the industry. DIDs are seen as key to combating Sybil attacks and enabling practical applications such as unsecured lending and improved governance models. “This is going to be a game changer for airdrops and network marketing/referrals,” said Haseeb Qureshi, managing partner at Dragonfly Capital.
By introducing this service using a public blockchain, Coinbase joins other organizations such as Proof of Humanity and Fractal ID in trying to solve the challenge of DIDs. Although technology giants such as IBM and Microsoft have also made efforts in this direction, Coinbase stands out as the largest company to implement such a service.
Although the identification service does not yet work globally, due to Coinbase’s limited operations in some countries, Qureshi expresses optimism: “We will see a network of these KYC providers operating together.” This commentary points to a collaborative and integrated future between different KYC verification platforms.
This advancement by Coinbase is a significant indication of the growing maturity of the cryptocurrency sector, marking an evolution in the interplay between blockchain technology, digital identity and regulatory compliance.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.