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Paypal’s First Blockchain Bet: Digital Identity

Last Updated March 4, 2021 2:43 PM
P. H. Madore
Last Updated March 4, 2021 2:43 PM

Paypal has made a relatively small (for a $120+ billion company) in Cambridge Blockchain, which is a company focused on digital identity.

Paypal’s First Blockchain Investment

Cambridge Blockchain is working on a product that will amount to a digital passport: the user will be able to have strict control of who uses their data, but also be able to use it to verify themselves. The investment gives a clear picture of how Paypal, who allow people to send, receive, and store money without the need of a bank (and even use ATM services through their debit card), might use the blockchain in the future.

Rumors of Paypal integrating Bitcoin payments have circulated for years, but the company has never really gone the whole way with cryptocurrency. Back in 2015, they enabled Bitcoin payments through Braintree, a company they acquired in 2013. A search of Braintree’s website today for “Bitcoin” returns no results.

Now they’ve made their first investment in a blockchain company that’s not focused on cryptocurrency at all. The dollar is still king at Paypal.

A Paypal representative told Forbes :

“We made an investment in Cambridge Blockchain because it is applying blockchain for digital identity in a way that we believe could benefit financial services companies including PayPal.”

A Future of Digital Identity and Blockchain

Besides gambling and value transfers, one of the primary use cases for decentralized ledger technologies is the secure issuance and usage of virtual documents. Things like land/auto titles, university degrees, and other types of credentials are ripe for a digital solution.

Using the blockchain and nonfungible tokens , the potential for fraud is significantly reduced. What a true “e-passport” or identification system will look like is hard to imagine from here, at a time when we mostly identify ourselves with photo ID cards that can be spoofed.

Cambridge Blockchain is just one company working in this sector. They’ve decided to go the traditional funding route, while Civic, a competitor, launched an ICO during the boom times of 2017. The Civic CVC token is used to purchase storage of digital identity on the Ethereum blockchain. At press time, CVC was trading for just under 10 cents.

The Cambridge Blockchain  approach is different. They aim to build blockchain-based products for financial companies that want more efficient ways to verify customers. If you’ve gone through any KYC process with a firm like Binance or Coinbase, you know that it can be arduous – taking selfies and so on.

Multiple Players in the Blockchain ID Space

Companies like Cambridge Blockchain and Civic might make it so that users only need to undergo the rigors of identity verification one time, and then be issued a portable, verified identity that is usable at multiple institutions.

Or the system may be even more advanced than that – people who are already verified with traditional banks or Paypal may be granted access to additional, global financial services with the click of a few buttons.

At this point, we can only guess at what companies like Paypal may need from firms like Cambridge Blockchain. While many crypto-enthusiasts would probably rather see Paypal enabling crypto payments within its massive user base, it’s nevertheless a positive sign for Paypal to be making moves in the blockchain space at all. Unlike traditional banks and technology companies, who have dozens of blockchain-related patents, Paypal has just one such patent.