One small step for Coinbase … one giant step for decentralized identity? Discussions about the so-called decentralized web—a future version of the internet in which blockchain technology empowers users to reclaim control of their personal data from technology companies and governments—often quickly turn into discussions about identity. After all, if decentralized applications (or, if you prefer, “dapps”) are really supposed to look and feel like internet applications, what will take the place of the centralized username and password model? How will we prove our identities without relying on companies like Facebook, Google, and Equifax to store our credentials? The jury is still out as to how best to pull this off, and many groups are pursuing a range of approaches. Now Coinbase, the industry’s biggest mover and shaker, may have just gotten a lot closer to figuring out how to build a “Facebook Connect for crypto.” The popular exchange and wallet service, which has been on an acquiring spree of late, announced yesterday that it has purchased a startup called Distributed Systems, which is developing a decentralized identity standard called the Clear Protocol. Coinbase admits that thorny challenges remain. “We’ll need to be deliberate about how and where we apply this technology,” B Byrne, product manager for Coinbase’s Identity team, wrote in a blog post explaining the acquisition. “We’re going to have new questions to answer about anonymity, privacy, and how permanent the different pieces of your identity should be.” An identity system also must address something else that hasn’t yet been figured out: what to do if a user’s private cryptographic keys get lost or stolen. And depending on how it’s designed, there’s a risk a decentralized identity system could turn into a sort of “supercookie” that creates even worse privacy issues than we have today, Cornell professor Ari Juels tells Wired. He adds: “Empowering users is a great rallying cry, but what will ultimately happen is users will end up punting these problems to centralized services." | 
