BitGo Announces Launch of Solvency Proofs Verified by BitGo
BitGo announced today the release of its latest product offering, Verified by BitGo, a product that provides a real-time view of bitcoin assets owned by a company.
Whereas in the past, verification attempts were slow and often had security risk concerns, BitGo hopes that this will be a verification that allows it to publicly share all of its assets. Further, it will be able to cryptographically display that it is in a solvent state.
When dealing with brokerages and wallets, knowing that the provider is solvent can go a long way toward making a decision on using a service. This service will enable end users to analyze what the company's assets are and compare that to its liabilities, even drilling down to ensure that the user’s own account is included in the total liabilities.
“We're offering Verified by BitGo to selected partners as part of our unified platform offerings. The first step needed is to use a BitGo wallet for storing the business' bitcoin,” Ben Davenport, CTO and co-founder of BitGo, said in an interview with Bitcoin Magazine. “It is not yet available for general self-service signup, but we’re interested in working with other Bitcoin businesses to help their security & transparency.”
ChangeTip the First to Use
In the announcement, it was revealed that ChangeTip was the first business that would be using the Verified by BitGo service.
"Building trust is critical to expanding our user base within the Bitcoin community and beyond, and using BitGo to demonstrate our Proof of Reserves goes a long way to achieving it," said ChangeTip CEO Nick Sullivan.
According to an email exchange with Bitcoin Magazine, Sullivan believes that, “having the Verified by BitGo logo gives users an extra sense of security.”
However, BitGo is opening up its operation to anyone who uses the BitGo platform offerings. As Davenport said in a statement, “Today we are launching our Verified by BitGo service, bringing the era of unverified funds to a close.”
It Could Have Prevented MtGox
MtGox is the perfect example of a business that was operating in an insolvent state for a significant period of time. Users had no idea that the amount of bitcoin they believed existed on the exchange was far more than actually existed.
The team at BitGo believes that if Verified by BitGo had been around when MtGox was operating that its service would have been able to alert users far sooner to the problems at the exchange.
“Yes, we believe it could have,” Davenport said. “Based on the information that’s been made public, we believe MtGox was effectively operating in an insolvent state for a very long period. While a regular audit like this would not have eliminated the possibility of a business going insolvent, it should help detect it far sooner, dramatically reducing the magnitude of the ultimate losses.”
In an internal crisis management document that was leaked, it was revealed that the company had lost 744,408 bitcoin in a theft that had taken place years earlier. Had a service like Verified by BitGo been around, it is feasible that many users would not have continued putting their bitcoin onto the exchange.“We are already working with several other companies interested in the product, but don't have specific names to disclose yet,” Davenport told Bitcoin Magazine.