Blockchain, Artificial Intelligence and Decentralization: Mathias Klenk, Felix Gerlach and Dave McGibbon do not want to read these terms together in an article about their Startup Passbase. To advertise today is a manslaughter argument, they find. Why do we use it anyway? Because exactly these technologies are used by Passbase – and not just serve as buzzwords. The startup could change the way users identify with banks, services, and companies. The two German founders Klenk and Gerlach want to simplify online identification together with co-founder McGibbon. Recently, in a round of financing, Passbase has taken half a million euros, including from Seedcamp, Google executives, and one of SpaceX’s early investors.
Half a year ago
The three founders work in San Francisco. Their company is still called Coinance and they develop an app for managing digital wallets for crypto currencies. In the long term, they want to turn their technology into a global payment system. That’s six months ago. A long time in Silicon Valley. Coinance has become Passbase. From the app for Wallets an online Ident procedure. Only the company headquarters remained.
What happened?
In order to be able to verify themselves by co-payment for all crypto exchanges, they would have had to use their users in some cases an eight-stage ID procedure, says Klenk. Every single platform wants the identity of its users to be confirmed. “We thought that’s so complicated, no users will do that” says the founder. Coinance was history, a new business model emerged.
The idea
Users should only have to identify with a company once. With this profile, they could then sign up for all sorts of other services. Like a passport or identity card on the Internet, says Klenk. And this is where the terms blockchain, artificial intelligence and decentralization come into play: When registering, motion profiling of users is detected and compared by means of machine learning, a subarea of artificial intelligence. An algorithm decides if it is a real person. Authentication requires the user to make a quick selfie video of themselves. And for comparison, a photo of an identity document such as identity card, passport or driver’s license transmitted.
Users should get their data back
For companies like Facebook and Google, data is sometimes stored for years and used for making money. Behind Passbase stands another philosophy: the protection of privacy and security. The data is stored in encrypted form on the company’s servers, with users always being in control of the passbase. If, for example, customers want to withdraw the data usage rights, that is possible at any time, the founders promise. Up to 30 days after the initial registration, a user can secure his ID and use it for other services on the Internet.
The blockchain is according to Klenk so far only a small component in the passbase system. With their help, the company can guarantee its users and service providers that data access was authorized. “It’s like a safe log,” says Klenk.
Crypto Crime
These blockchain startups are the detectives of the 21st century The fear of blockchain crime is great. This is shown by the success of analysis startups such as Chainalysis. More and more authorities are using their software.
For the time being, the Passbase founders want to concentrate on the B2B market. The focus is on companies that have problems with fake accounts – dating sites, fintechs or travel providers. According to Klenk, the company is in discussion with around 200 companies. He says that everything is represented, says Gerlach: large German banks and smaller startups as well as larger players from the USA.
For all of them, Passbase could indeed offer added value, Klenk and Gerlach hope. “For businesses, it’s a risk to store all user data, such as passwords and e-mail addresses, on their own servers. Keyword data protection regulation, “says Klenk. “We offer them the security of being able to keep the data decentralized.” According to Gerlach, the integration of this security component into existing systems should only take three minutes.
Other verification companies like IDnow in Munich earn their money per authentication. Not so Passbase: “Companies pay us monthly or annually in order to have the entire user base constantly authenticated.” Soon the closed trial phase will start with selected companies. A public test should begin in the summer. A home app is planned for the fourth quarter of 2019.
Also published on Medium.