PayPal Makes Initial Venture in Blockchain Firm

In News, Technology

Did PayPal make the right move?

PayPal is an online payment system used by online merchants as well as companies that hire remote employees. There is no doubt that the demand for Decentralized Ledger Technology is continually increasing. The unstoppable trend and burgeoning potential of the blockchain technology may have persuaded the company to make its first-ever investment in it.

PayPal invested in the Series A funding round of Cambridge Blockchain. It is a startup that assists financial institutions and other firms with the handling of sensitive data by utilizing shared ledgers.

Both parties did not disclose the amount of investment. However, recent SEC filings show that Cambridge Blockchain has accumulated a total of $3.5 million. The amount came from various investors from the previous 9 months. In May 2018, the blockchain company received $7 million which brought the total capital to $10.5 million.

About Cambridge Blockchain

Cambridge Blockchain is based in Massachusetts. The firm keeps, disseminates, and verifies data using blockchains. It can operate on top of any distributed ledger, whether on a private or public aspect.

The core of Cambridge Blockchain encompasses the integration of personal data and know-your-customer or KYC review. This is important when setting up bank accounts and accounts with other financial services providers. At this point, the blockchain company is already collaborating with Foxconn regarding corporate sensitive supply chain data.

Breakdown of Series A $10.5M total investment

The initial investment of $7 million comprised of $4 million in new capital. The remaining $3 million came from the converted notes of different investors such as HCM Capital. It is the Venture Capital division of Foxconn that manufactures the Apple iPhone.

PayPal along with Omidyar Network, Flourish, and Future/Perfect Ventures added the $3.5 million investment. eBay, which is PayPal’s parent company, started the charitable firm Omidyar Network. Flourish, on the other hand, is Omidyar’s financial incorporation investment spinoff.

To this extent, the investment of PayPal is median but significantly paramount. A company spokeswoman said through an email:

“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. Our investment will allow us to explore potential collaborations to leverage blockchain technology.”

According to Cambridge Blockchain CEO Matthew Commons, they have quite a few tentative initiatives ongoing with PayPal. They conduct many KYC transactions and handle countless personal data because of it. The online payment system already has 267 million active accounts.

He added that data privacy is becoming an important interest and has gotten wide acceptance in the European banking market. They found out that a particular type of personal data is the one they can get paid for. That data is linked with onboarding or KYC which is much faster.

Better late than never

It is noticeable that PayPal invested late. It joined the extended Series A funding instead of the first one initiated in May 2018. Commons emphasized that it was a matter of acquiring confidence. Cambridge Blockchain plans to begin operation later this year with a team composed of 11 engineers.

This move of PayPal will allow users to have more governance over their digital identities. Cambridge Blockchain joined key players including Accenture, IBM, Mastercard, and Microsoft to work together under the umbrella of a non-profit organization known as Decentralized Identity Foundation.

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