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Magic raises $ 27 million in Series A to become an internet passport

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The current Internet is dominated by several big tech companies that we have come to rely on every day when browsing online. The incentives surrounding users and these large tech companies are currently inconsistent. Sean Li (CEO), Arthur Jen (CTO), and Jaemin Jin (Chief Blockchain Officer) have joined together as three co-founders to bring Magic, a tool that seamlessly integrates unstoppable passwordless authentication into the latest technology stack. created.

San Francisco-based startups include major investors Northzone, Tiger Global, Volt Capital, Digital Currency Group, CoinFund, and former seed-round investors Placeholder, Cherubic Ventures, and SV for $ 27 million in Series A ( Raised a total of $ 31 million). Angel, Navy Ravicant, Giller Moroch. In addition, several prominent angels include Alexis Ohanian (Reddit co-founder, Initialized Capital), Balaji Srinivasan (former Coinbase CTO, Earn.com co-founder), and Ben Pruess. (President of Tommy Hilfiger, Former VP of Adidas), Casey Neistat (YouTuber, 12 million subscribers), Guillermo Rauch (CEO of Vercel & Next.js), Jacob Jaber (CEO of Philz Coffee), Jason Warner (CTO of Github) )), Kayvon Beykpour (Head of Consumer Products Twitter, Founder Periscope), Naval Ravikant (Co-founder of AngelList), Roham Gharegozlou (CEO of Dapper Labs), Ryan Hoover (Founder of Product Hunt, Weekend Fund), Sahil Lavingia (CEO of Gumroad), Scott Belsky (Adobe CPO, author of The Messy Middle), Soona Amhaz (Volt Capital / TokenDaily General Partner), Varsha Rao (Nurx CEO, former COO of Clover Health, former of Global Ops) Responsible) at Airbnb).

Prolific angel investor Naval Ravikant says Magic has a decentralized user identity and authentication that points the way to a world uncontrolled by tech giants.

All Magic team members.

Sean Lee

Frederick Daso: How did you reach the current situation where you rely heavily on major tech companies to access key services in exchange for personal information (and as a by-product)?

Sean Li: Over the last 25 years, the total number of Internet users has increased exponentially from 0.4% to 65.6%. In reality, big tech companies are benefiting from this remarkable growth. The number of user entry points doubles as the app becomes essential to our daily communication, work and play. Big Tech took advantage of this by providing sign-in with an existing username and password. As a result, these companies become centralized custodians, accumulating swarms of user ID data, and creating a single point of failure with too high a risk of failure level.

This problem exacerbates itself. Password theft rates are accelerating as one password leaks makes it easier for others to compromise and more companies go online for a pandemic.

Facebook’s latest data breaches have compromised phone numbers and personal data, making it easier for hackers to impersonate users and pass them login credentials. As a result, more than 500 million user data was leaked.

Big Tech isn’t motivated to take a step back and rethink how user authentication and identity evolve to meet the inseparable future needs of our lives in the digital world. We are now living in the post-password era.

Daso: What are the incentives to create the current digital ecosystem as it is today? How do these incentives deviate with respect to the average Internet user?

Li: Many major tech companies happen to be identity providers as well. The core business model is not to provide identity and authentication to the average Internet user, but collecting user data facilitates and optimizes monetization. This is the main inconsistent incentive. As a result, user security, privacy, and self-sovereignty identities are very low priorities. The way users authenticate to online services has undergone little innovation in the last few decades. Passwords are obsolete, but they are still a popular form of authentication.

However, the positive side is that more and more pioneering companies, such as Slack and Medium, are pioneering passwordless logins via email-based magic links. This has increased awareness of alternative authentication methods and has led companies that value security and UX to adopt Magiclink.

Daso: Why has certification innovation stagnated for the last 30 years? Do the inconsistent incentives mentioned and discussed above also influence innovation efforts in this area?

Li: Passwords are a flawed security measure that allows users to verify their identity. Over 80% of hacking-related breaches used stolen or weak passwords. The password management market is currently worth billions and is growing rapidly, generating lucrative profits for companies that motivate many password-related issues to remain unresolved.

With the rise of password managers, the industry is also developing a habit of transferring account security responsibilities to the average Internet user who is likely to be unaware of online security. In addition, compromised users are often accused of poor cybersecurity hygiene.

This cycle brings complacency. I think we need to solve this problem fundamentally. By providing developers with tools to easily add secure authentication methods to their apps, users don’t have to deal with password-based logins in the first place. The average Internet user should not suffer from the complexity of managing online security. True innovation in the authentication space helps restore the trust of users on the Internet, which is at the heart of Magics’ mission.

Daso: How can you authenticate for the future? How can you make your solution essentially time-invariant to the evolving conditions and future needs of the authentication process?

Li: Instead of a username and password, Magic uses the public and private keys to authenticate the user. The distributed identifier is signed with a private key and generates a valid authentication token that can verify the user ID.

Traditionally, a username is a unique, publicly recognizable identifier that helps identify a user. In contrast, passwords are secrets created by users and are assumed to be known only to users.

Public and private keys are significantly improved versions of usernames and passwords. The public key is an identifier and the private key is a secret. Key pairs are created by the user and are used to ensure the enormous value that exists on mainstream blockchains such as Bitcoin and Ethereum, rather than being prone to human error (eg weak / repeated passwords). Produced by an elliptic curve cryptography that has been proven as an algorithm to be used.

Using blockchain key pairs for authentication, Magic is natively compatible with blockchain and supports over 14 blockchains. This gives developers using Magic the potential of the rapidly expanding blockchain industry, which is projected to grow 56.1% year-on-year and reach $ 69.04 billion by 2027.

Key pairs protect your privacy (no personally identifiable information) and are exportable. This makes the user ID portable and can be owned by the user himself (self-sovereignty). The world is already heading in this direction with pioneering solutions from companies such as Workday and Microsoft.

Daso: Specifically, what are the outdated authentication procedures behind the realm of the modern technology stack? What additional features and benefits can technology companies’ infrastructure benefit from the adoption of Magic?

Li: Modern applications are rarely built from scratch, instead are built with configurable and interchangeable developer LEGO. Each developer is responsible for fragments of application functionality, such as storing and organizing catalogs with CMS processing payments and providing advanced search. An application built using .Jamstack technology is a good example of this.

If this is a new trend, why is authentication an important part of the infrastructure, not the more general part of LEGO? This is because companies offering outdated password-based authentication methods pose a significant risk of platform locks. Passwords may be hashed and stored differently across platforms. It is also a one-way procedure. Once the hashed password is stored within the corporate infrastructure, it cannot leave the password. This makes it nearly impossible for developers to switch to another authentication platform without seriously impacting their existing user base. This is a major reason why many developers are still building their own certifications, despite the costs and challenges.

Magic does not have a password by default, so there is no lock-in by saving the password. Developers can replace Magic with an alternative solution or their own in-house implementation without impacting the end user. We’re also not afraid to push the boundaries of authentication by adopting new standards such as WebAuthn and creating an SDK that allows developers to add hardware / biometric-based authentication with just a few lines of code.

Magic is designed with scale in mind, and many of our customers have a large and fast-growing user base, so they grow with them. Developers can also easily plug the Magic SDK into modern technology stacks such as Jamstack and low / no code platforms such as Webflow. Magical security is also constantly evolving. We carry out regular audits and plan to further improve security by adopting continuous, behavior-based certification.

Daso: The password itself is a weakness of the user’s online security, and I mentioned earlier how to create a Magic for developers to prevent the former from having to process the password again. However, developers are known to serve as an inconsistent type of customer. So what other authentication factors do developers care about, as well as removing the burden on developers to create and maintain their own authentication protocol for user passwords? And how did you design Magic to address their concerns?

Li: Authentication is a critical path for users, so changing authentication after implementation has a lot of inertia from developers. This provides a strong retention of Magic by giving developers the peace of mind they need in an authentication solution to focus on building what’s important to their business.

Developers are also very interested in reliability and availability. That’s why we partnered with a vendor to ensure that login emails are delivered quickly and reliably to users’ inboxes and operate at 99.99% uptime. Magic also makes it easy to extend the default email-based Magic Link login, including the addition of social login and WebAuthn login. SMS and multi-factor authentication are coming soon.

Magics value propositions go beyond developers. This new funding round fully extends the feature set for businesses and teams.

Daso: I remember when we first spoke, you described Magic as creating a passwordless future. Now, you have expressed Magic’s vision as an internet passport. What is the motivation for this restructuring of your company’s vision? How does it first focus individual users in front of large tech companies?

Li: Building a decentralized and promising certificate has always been our goal, and building an internet passport is to help more people understand our vision. Is a more specific way to explain.

Creating a passwordless future is a necessary first step, as authentication cannot guarantee the future without it. Therefore, I often choose to keep it simple and focus on eliminating passwords. This also resonates with the technical audience, as most people hate passwords.

I often compare what I do with Magic to planting trees for reforestation in my team. All users who support distributed identities onboard are planted trees. When the user operates an application that uses Magic authentication, it is automatically onboarded to the distributed ID. Decentralized identities are not a major technology company, they are wholly owned. The fastest way for us to get there is to build the best certified product for developers-empowering developers in the world’s easiest way to integrate Magic into their applications.

Sources

1/ https://Google.com/

2/ https://www.forbes.com/sites/frederickdaso/2021/07/22/magic-raises-a-27m-series-a-to-become-the-passport-of-the-internet/

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