BitGo, which in April rolled out the first enterprise-grade “multi-sig” digital wallet to tackle widespread concerns about bitcoin theft, has attracted $12 million in fresh funding and signed to its board a pioneer in e-commerce security.
In a press release, the bitcoin
security startup said the new Series A round investor was led by
venture capital firm Redpoint Ventures and included contributions from
Radar Partners, Founders Fund, Barry Silbert’s Bitcoin Opportunity Corp.
and Ashton Kutcher’s A-Grade Investments. Previous investors
Bridgescale Partners, Jeff Skoll, Bill Lee, and Eric Hahn participated
in the round.
Radar Partners’ Stratton Sclavos, a former CEO of Internet certificate authority Verisign Inc.VRSN -0.29%,
will join BitGo’s board along with Redpoint founding partner Jeff
Brody. The involvement of Sclavos carries symbolic significance for
BitGo, which in the words of its Chief Executive Will O’Brien, has
“ambitions to secure the world’s bitcoins.” It’s also relevant to
bitcoin more broadly, with the general public still wary of trusting a
digital currency and payment technology that has been subject to massive
losses and some troubling hacking attacks.
Early in Mr. Sclavos’s tenure at Verisign, the company used the
Internet’s Secure Sockets Layer encryption tool, better known as SSL, to
develop an authentication system for e-commerce web sites. This led
Verisign to became the Internet’s leading certificate authority in the
mid-1990s, its ubiquitous logo emerging as a de facto stamp of trust.
Along with similar services by other firms, this encouraged people to
start making payments over the Internet. Mr. Sclavos left the firm in
2007 and it was later sold to Symantec Corp.SYMC -0.09%
Mr. Sclavos says he was struck by the similarities between those
early days of the Internet and bitcoin’s current development phase, as
its backers try to build legitimacy and encourage mainstream adoption.
Back in mid-1990s, when Verisign was founded, “you had millions of
browsers downloaded and tens of thousands of web sites but you really
had no idea where you were going or who was behind the web sites,” Mr.
Sclavos said in an interview.
“This seemed to us incredibly similar to bitcoin, which is still in
the wild, wild west phase, still volatile, [people] not being sure
exactly who to trust and what is happening with bitcoins in a wallet and
where they are going if something goes wrong . to now having BitGo
there to create a trusted infrastructure, using standard technology.”
In April, when the bitcoin community was still roiling from news that
now defunct exchange Mt. Gox had lost 850,000 bitcoins, worth around
$500 million at the time, BitGo rolled out BitGo Enterprise, the first
digital wallet that uses “two-of-three” multi-signature technology as an
added layer of protection.
Under this arrangement, digital coins cannot be released from a
wallet unless two of three private keys – the unique alphanumeric codes
used to digitally “sign” encrypted transactions – are applied to it. For
each wallet, BitGo generates three different keys, one that’s attached
to the live, online wallet and controlled by the owner, one that’s held
in an encrypted format by BitGo, and a third that’s held offline in
so-called “cold storage” by the owner. That way, if owners want to take
complete charge of their bitcoins without requiring the engagement of a
third-party institution, they can do so. But under all other
circumstances, the engagement of the firm’s second online key helps
ensure the speed, efficiency and security of transactions.
In an interview, Mr. O’Brien said in addition to marketing its BitGo
Enterprise wallet, his firm is now reaching out to businesses that use
bitcoin and offering them a chance to use its multi-sig platform in
their own wallets and internal protections.
He sees this specialized service in keeping with where the bitcoin
economy will head “in parallel to the way the Internet developed.”
“Now that the Internet has matured you don’t have everyone operating
web servers, or operating systems or operating languages. There’s
specialization that takes place along the way,” Mr. O’Brien said. “That
way the entrepreneurial system can move faster, build on top of what
other companies have developed and build on top of standards.”