Vaultoro is the brainchild of brothers Joshua and Philip Scigala in London, I spoke to co-founder Joshua about his new business venture that caters to the Bitcoin investor in all of us. With the Vaultoro service, now you can save Bitcoin securely, long-term, and buy Gold, no matter how small an investment you need to start with. Sounds interesting. Let’s find out the inside story.
Tell me about yourself and the genesis of this venture. How did you come up with the idea, and how have you reached this point.
“I sometimes wonder why I fell so in love with Bitcoin. With my interest in Austrian economics, I knew that a lot of the major problems we see in the world are due to the centralized control of debt as money. What that means is that if I have 50 dollars in my pocket then someone somewhere owes $50 plus interest to a bank! The issue scales out (on a national scale), as we now see nations owning other nations through debt, Greece, for example. And this whole downward spiral is caused by the way money is created because most nations around the world lend money into existence with interest.
Bitcoin was this huge positive move in the right direction! Why? Because, like gold, it is spent into existence. Circulating without intrinsic debt.
So that’s one of the reasons I got into Bitcoin, but what gave me the inspiration to create the gold Bitcoin exchange vaultoro.com has a bittersweet story.
Fast forward to December 2013 where I, like many others, got stung with the collapse of MtGox. Feelings of sadness and anger washed over me, not only for my loss but for everyone else who lost money through this mess of an exchange. I have a technical and creative background and started work thinking about how to fix the auditing, transparency and volatility problems that had plagued Bitcoin (exchanges).
Gold fit the bill perfectly. Gold has very old and well-established auditing procedures as well as security protocols, it’s private, can’t be printed out of thin air like USD or EURO. If you could easily trade in and out of it, then gold could also protect people from the massive volatility of bitcoin. It was the perfect solution. So I threw my savings into it, secured some other private investment, and one year later and here we are, open for business!”
Your concept sounds similar to BitReserve. How are you different?
“BitReserve is also a good company with great ideas, they give you a set buy and sell price and so is not really a market but still a great way to hedge against volatility. What vaultoro.com offers is a true trading platform where people set their own prices. Not only do we want to help Bitcoin have a price discovery system based on gold and not only fiat currencies. Vaultoro lets you really trade in and out at whatever price you set, and if someone else agrees on your price then the trade is settled.”
Do you buy and sell or exchange Bitcoin or just Gold? Can you buy Gold with fiat currency through your company?
“Currently, vaultoro.com is a pure Bitcoin/Gold trading platform and no fiat at all. We want to give the Bitcoin community something that the rest of the world hasn’t got. There are companies that offer fiat for gold trading, and it takes 2 to 7 working days to send your money. Banks usually take large fees for the privilege, and then you can buy gold. Then, when you want to sell, you have to wait another 2 to 7 working days and more fees just to get your money out. With Bitcoin, everything is more fluid, fast, fun and almost free (Bitcoin network fee).
We currently also buy back gold for Bitcoin at our price to add liquidity to the market and will be looking to employ more market makers in the future. We hope the market will get big enough to eventually run mainly without us.”
You mentioned in the video even if your company closes down, access to the gold is guaranteed. Please explain.
“Yes, this was really important for us because I never want people to have to go through what they did with Mt.Gox again.
It works like this. With each physical gold withdrawal request by a Vaultoro member, a chain of instruction is set in motion which includes a reputable 3rd party Law firm that must sign all withdrawal transactions. That ensures that Vaultoro founders, executives, or other employees do not have legal authority to access any gold without a third party signature. In all cases, for a physical gold withdrawal order to be executed, three signatures are required. This is called the six eye principle.
This is also great for our customers in the unfortunate and unlikely event where something was to happen to the company.
Every 24 hours Vaultoro encrypts a copy of all client’s aliases, real identities, Gold and Bitcoin balances to a contracted law firm and the Vault Operator. Neither can decrypt and read the data without the decryption private key. This private key is held in a safety deposit box, and the keys to this box are held by Vaultoro lawyers.
Any information will be published online on how to proceed from there. The point is that we have gone out of our way to make sure our clients could always get to their wealth if something were to happen to Vaultoro. That said, we have big plans for growth and plan to be around for a very long time.”
Describe your target audience or ideal user. Who reading should this be interested in using Vaultoro?
“We have a few types of people in mind that we feel would love cheap trading and investment grade gold at near spot price.
Please tell me more about your “cold wallet” system.
“I have always wondered why Bitcoin exchanges don’t let people publicly audit their cold wallets by publishing them.
We have anonymized all users, and publicly displayed their Bitcoin and gold holdings. This way people can check if they are on the list (only they know their own anonymous code) check that their balance is correct. If it is, then they can rest assured that other peoples are too, if not there would be kicking and screaming online. Then they can see the sum of all our holdings and check if our warm and cold have an amount = or > that amount.
Our cold wallets are not cold in the traditional sense like a paper wallet is, but they’re held in offline dedicated multi-signature devices around the world. For security reasons, I cannot disclose the details too much but the level of security we have gone into, is ridiculous. What I can say, however, is that multi-signature is a huge huge step in the right direction for Bitcoin security. All companies and people will use multi-signature in the future.”
Image provided by Vaultoro.
Is Vaultoro onto something here? Have they covered all the bases, in your eyes? Share above and comment below.