Whenever talking to somebody who does not believe in Bitcoin, that person will often tell you stories about the lack of security. All kinds of horror scenarios are brought up. Granted, the fact that you can send Bitcoin from one person to another over the internet makes it…
Whenever talking to somebody who does not believe in Bitcoin, that person will often tell you stories about the lack of security. All kinds of horror scenarios are brought up. Granted, the fact that you can send Bitcoin from one person to another over the internet makes it vulnerable to hacking attempts. Luckily, some of the most brilliant minds in the world are working hard to change this.
Meet Gavin Andresen, chief scientist at the Bitcoin Foundation. He is one of the primary authors of the software that runs Bitcoin’s peer-to-peer network. He controls the alert key that allows him to broadcast critical messages to all Bitcoin clients. Let’s just say he is a very important guy. Andresen has been thinking about Bitcoin security protocols long before. He came up with P2SH, short for “pay-to-script hash”. Basically, this is a hack of the Bitcoin protocol. It lets you keep your Bitcoin safe even if your primary private key is stolen. Andresen hacked and extended the open-source software.
This addition to the protocol allows users to protect their coins with more than one private key, similar to protecting e-mail or online banking accounts with multiple login credentials. The technology existed before, but there were no options available to use it, until Silicon Valley startup BitGo decided to join the discussion. They built a new online wallet. This wallet uses multiple signature technology and, according to BitGo, will make Bitcoin a lot more business-friendly and more secure too.
Using a BitGo wallet is very easy. After signing up, BitGo creates three keys. The first key is stored by the company’s servers; the second key is encrypted and stored on BitGo’s servers and the third key is printed out and put somewhere safe. In a worst-case scenario where you somehow lose access to the other keys, the third can still keep your Bitcoins secure. If you want to spend your coins, you will need access to two of three keys.
Typically, you would spend Bitcoins by logging into your BitGo account and using your phone to get access to a second key.Anyone can use the BitGo wallet, but the company sees a real opportunity in building bank-like services that let companies put corporate controls over their bitcoins. On Tuesday, BitGo introduced a suite of wallet services that let businesses limit how many bitcoins a user can spend without corporate approval, and control digital currency spending in other ways.
It seems a bit too early for features like these. Right now, businesses mostly convert Bitcoins into dollars whenever they receive some. The people at BitGo like long-term thinking, though. They believe more companies will start holding Bitcoins and using them to pay employees and suppliers. “A lot of the work being done now by companies like ours is trying to make bitcoin more familiar,” says Will O’Brien, BitGo’s CEO. “Making it feel like online banking is a starting point. But when you get to advance use cases, there are some things you can do.”
Improved security is probably one of the most important things Bitcoin needs to work on. Technologies like this make cryptocurrencies more appealing to enterprises, which in turn brings it closer to the common people. The possibilities are endless, and people will keep developing Bitcoin. That is the power of a decentralized, open-source protocol.
Last modified: January 25, 2020 10:01 PM UTC