Software engineer Ben Davenport, who co-founded the startup Beluga which Facebook acquired to build its Messenger application, just left the company after several years to dive into the world of bitcoin.
Mr. Davenport, who has invested in at least seven bitcoin startups since 2011, told to Coindesk that he will take a position co-founder that will head a product: “The way I think about Bitgo is it’s a pioneering leader in security forbitcoin.”
BitGo and multisig
Mr. Davenport mentioned that BitGo became one of the first companies that launched a multi-signature (‘multisig’) bitcoin wallet as a more secure way of storing bitcoins.
The wallets of today have two keys, one of which public and another one is private. The latter one is required to release funds, so in case you lose it the funds will not be reached, and what is more important if the key was stolen it may result in the funds being stolen.
Nevertheless, Multisig uses more than one private key, and two or three of them must be signed before funds will be sent. Moreover, if one of the private keys is lost or stolen, the user still can accept the funds, providing the other keys.
Consumer wallet by BitGo currently has three keys: one for the user, one for BitGo and one is a backup option that is stored offline. If you lose one key it is still possible to access the wallet, as at least two of the keys must be provided.
However, the company intends to proide a product to organizations that would have a more complex security scheme. BitGo is building a new technology that can be used as the bitcoin variation of traditional corporate accounting software.
“This is really bringing the same type of [multisig] technology to companies that want to hold and transact bitcoin,” said Mr. Davenport.
Larger organizations are much more difficult in operation.
“All those people need to transact with bitcoin, but need to be able to have business roles in place,” explained Davenport. “Spending limits, velocity limits and approval chains.”
That’s the niche where BitGo sees an opportunity: the company wants to provide organisations with the ability to better control bitcoin process.
Moreover, Ben Davenport added:“That sort of thing doesn’t exist for bitcoin today and that’s one of the things that BitGo will be enabling.”
In addition, BitGo won’t just be targeting traditional companies, it will focus on other bitcoin businesses including exchanges, wallets and others.
Growth of multisig
Multisig is believed to become the image of bitcoin wallets in the next few years, as it it is clear that one key does not provide enough security.
BitPay has been working on finding a multisignature wallet solution, along with Cryptocorp, a company co-founded by Ryan Singer.