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Bitcoin security company BitGo announced this Tuesday a new stamp of approval in Bitcoin transactions that aim to help consumers put more trust in transactions in the digital currency.
The product, called Verified by BitGo, intends to show users of Bitcoin companies that the firm they are dealing with has adequate funds to keep up with its obligations.
Throughout the history of Bitcoin, we have seen operators not having the funds they claimed to have. With this new product, BitGo will calculate both a company’s liabilities and its assets. As long as its assets are in excess of its liabilities, participating companies will be able to display a Verified by BitGo certificate on a dedicated page.
The first customer will be ChangeTip, a “micropayments” company that allows people to easily send small amounts of Bitcoin to each other.
Nick Sullivan, ChangeTip CEO says:
“Historically, banks have operated as a fractional reserve, and that’s fine as long as the company is solvent, but if the company’s insolvent, there’s not enough money to cover liabilities beyond just saying that we’re not running a fractional reserve, this new step forward with BitGo allows us to prove we’re not running a fractional reserve, with cryptography.”
To launch, the verifications will occur on a monthly basis. This means that, in the beginning, the Verified by BitGo seal could appear — at least until BitGo’s next monthly audit — even in transactions with companies that are insolvent.
The Verified by BitGo service offers transparency as a service, allowing any business to easily show its assets and cryptographically prove that it is operating in a solvent state. Now, end users of any business using the service can view that the company’s assets are greater than its liabilities, and verify that his or her account is included in the total liabilities. Verified by BitGo is the equivalent of a publicly accessible audit that provides transparency and security, demonstrating that the sum of all user accounts is equal to or less than its total assets.
The service is only available to businesses that secure their assets at BitGo.
Awesome idea, we truly need some more anti-fraud verifications in the ecosystem.