PayPal is branching into the blockchain space, hoping to explore its promise of enhanced data privacy and management.
The payment giant has made a late contribution to Cambridge Blockchain’s Series A round alongside Ebay founder Pierre Omidyar’s investment firms, and is planning to pilot the startup’s product, helping users control their personal data using shared ledgers.
“We have a number of exploratory initiatives underway with PayPal,” Cambridge Blockchain CEO Matthew Commons told The Block, hinting the backing was part of a wider partnership.
“They do a lot of KYC and manage a lot of personal data because of that,” noting the strategic value for the payment firm, which has 267 million active accounts.
Commons also explained PayPal had been following its progress for some time, having sponsored a fintech programme it was selected for in Europe. By fall 2018, Cambridge Blockchain had made contact with their corporate venture team.
PayPal also recently moved its European headquarters to Luxembourg, where the Massachusetts-based startup is focusing the first roll-out of its distributed identity system.
“Data privacy is becoming an increasingly important interest…[and] we’ve gotten most traction [and the highest pay-point] in the European banking market,” Commons noted.
Buoyed by $10.5 million in raised capital, the firm is planning on using the blockchain to validate data and store attestations (“like fingerprints or scans”) in cryptographic proofs. The idea is that once one party has stored on the data, they can share that validation with service providers seeking to onboard the customer without granting them access to other personal information.
“We’ve found that a particular type of personal data – that related to onboarding, KYC – is one we can get paid for, so we’re starting there,” he noted. “It’ll be much quicker.”
The focus then will strictly be on b2b services, validating data needed to open accounts with banks and other financial institutions.
Asked why PayPal waited until the extended Series A, rather than the one that closed in May last year, Commons said it was a matter of gaining confidence.
“It’s a new space. People are figuring it out…we’re happy they took their time. We learnt a lot in the diligence phase.”
They may be in luck. Cambridge Blockchain is hoping to start operating later this year, having been in the works for four years and now driven by a team of 11 engineers. It’ll also mean more fund-raising at some point.
“It probably won’t be the last round.”