Bitmain Opens Coconut’s Code, A Privacy-Focused Know Your Customer (KYC) Protocol

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Code Opened For Coconut, A Privacy-Focuses KYC Protocol

The largest crypto mining firm in the world, Bitmain, has developed a new code with the use of Intel’s Enhanced Privacy ID. This new code, Coconut, is popular for the way that it maintains privacy with the know-your-customer protocol. With the division, this company is able to keep information about the identity of the user separate from the information that businesses need to remain compliant, addressing a major concern in the market.

The document on this code notes,

“As one of the major features of blockchain is that all transaction records are public, transparent and permanent, there are concerns that organizations could potentially track and analyze customer behavior on blockchain once they have implemented KYC. This will raise serious privacy issues and obstruct the spread of blockchain.”

With this separation, businesses are about to use the software themselves, while offering “authentication as a service.” Most exchanges have a history in the current market of requiring users to give up all of their personal information for the sake of making a Bitcoin transfer. Coconut provides a potential solution by verifying information and then splitting it up to the proper areas of the industry as needed.

Deciding to make the code openly sourced shows that Bitmain may not intend to make this protocol a part of their own business model. It does, consequently, open the door for other companies that have an interest in this type of identity verification, like digital wallet providers and companies that want to outsource it. Right now, the code is licensed by Apache 2.0, and was established in Java.

On the Bitmain blog, the company wrote,

“Although there are numerous identity authentication schemes in the industry, most of these schemes focus on the use of blockchain to store and verify users’ identity information, or they attempt to carry out authentication in an absolute decentralized manner, which, considering today’s reality, seems to be part of a cryptopian future. The failure of the existing schemes to address the issues today has prevented them from being adopted widely. Coconut aims to use technical means to solve the problems in the service layer instead of the network layer.”

The decision to open source a crypto code follows a trend in the market, which has a history of both proprietary and closed-source coding. However, though it is not a mining company like Bitmain, Square recently open-sourced the cold storage system that they use for holding Bitcoin.