Hong Kong-based Bitcoin startup "Brawker" was launched just last year in late 2013. The service allows users to easily buy anything with bitcoins on a peer-to-peer platform. Brawker served as a centralised escrow to facilitate the exchange of bitcoins and products between users. However, in a…
Brawker served as a centralised escrow to facilitate the exchange of bitcoins and products between users. However, in a recent interview on CCN, Brawker’s CEO Cyril Houri told CCN that Brawker would soon become a lot more decentralised.
“We are currently working on making our site even more decentralized. We realized after the MtGox bankruptcy that this market desperately needed less centralization. So we will soon release a version of our website that goes one step further in this decentralization process by having both the e-commerce transaction and the bitcoin transaction happen OUTSIDE of our infrastructure, without ever having to hold the users’ funds. And the best way to not lose your customers’ funds is never to hold them.”
True to his word, just about a month after the interview, Houri’s company has implemented multisignature transactions to make Brawker a fully decentralised platform for exchanging bitcoins.
As the video above shows, multisignature transactions are simple, yet secure. The bitcoin spender, John, and the bitcoin buyer, Lucy, create a multisignature transaction on the blockchain, outside of Brawker. John, Lucy, and Brawker each hold a unique key, and two out of the three keys are required to complete the transaction. So if the transaction goes smoothly, John and Lucy can use their keys to finalise the transaction, without Brawker getting involved. However, if there is an issue, Brawker can use its key to arbitrate. In all cases, Brawker does not store any bitcoins or fiat currency.
As most Bitcoiners know well, centralised exchanges are huge targets for theft. After all, who can ever forget the Mt Gox fiasco? A centralised escrow service also requires huge amounts of trust from its users, since the service provider can suddenly abscond with users’ bitcoins. This isn’t possible with a decentralised, multisignature escrow. With Brawker’s implementation, at least two private keys would have to be compromised, which is far less likely to happen than just one private key – Brawker’s, being stolen or misused.
Decentralisation is becoming an increasingly popular trend with the countless examples of failures in centralised systems. For instance, MCX’s CurrentC payment system was recently hacked, resulting in the leak of hundreds of users’ email addresses. Cyberattacks on JPMorgan Chase compromised 76 million households. Earlier this year, bitcoin lending site BTCJam was hacked, and over 26 bitcoins were stolen.
With decentralised systems, the only point of failure is the user, and any successful cyberattack only affects the user, not everyone who uses the system.
However, in many cases, centralisation provides convenience, as it puts less responsibility upon the user. Many people argue that traditional banking is safer than using bitcoin since money is stored and insured in vaults, rather than kept on one’s hard drive or a piece of paper.
But if our financial systems can be built to be both decentralised and convenient, such as Brawker’s elegant implementation of multisig, perhaps centralisation may eventually no longer be necessary?
What are your thoughts on Brawker’s implementation of decentralised, multisignature transactions? Please share your thoughts in the comments section below.
Images from Brawker and Shutterstock.
Last modified: February 13, 2020 6:31 PM UTC