Bitcoin startup BitGo has launched an API platform designed to address one of the cryptocurrency’s biggest problems: security.
“As we continue to see explosive growth in bitcoin-related investments, businesses need to build a rock-solid security foundation that instills end-user confidence,” BitGo co-founder and CEO Will O’Brien explained. “The BitGo Platform API can help businesses, both large and small, focus their development resources on core competencies and product differentiation while security is managed by the specialists.”
Using the BitGo Platform API, third parties, such as popular Bitcoin exchange Bitstamp, can build Bitcoin-based businesses on top of the security infrastructure BitGo has developed. This infrastructure includes key signing, authentication, and transaction monitoring.
BitGo, which has raised more than $12 million from investors, also enables multi-signature transactions, which became a hot topic in the Bitcoin community last year. Many believe “multisig” is an important part of Bitcoin’s future because it has the potential to address some of the cryptocurrency’s biggest security threats. As Coindesk’s Thomas Kerin described:
“Imagine a safe in a bank that needs two keys to unlock the safe at any time — the bank’s key and your personal key. Multi-signature addresses capture the essence of this but without needing to be in the same place. And since the keys can be in separate places, it’s unlikely an attacker can compromise both; whereas with regular bitcoin addresses, the attacker knows roughly who to target, and could compromise the server in any number of ways just to steal the wallet file.
Services using multi-signature addresses have a much greater resistance to theft, since instead of just needing access to the server’s wallet, funds are protected by the elliptic curve digital signature algorithm (ECDSA), a far greater barrier than the security a website could implement in its code.”
As Kerin noted, multisig support is not new to Bitcoin but it has taken a while to catch on because “multi-signature addresses and transactions are still a bit complicated to carry out.” With its Platform API, BitGo is one of the players aiming to make it possible for third parties to take advantage of this feature to build secure Bitcoin services without having to invest in building out their own complex infrastructure.
APIs and the future of Bitcoin
The past year has been a volatile one for Bitcoin. The cryptocurrency lost more than half its value and major security thefts and security issues made headlines. But despite the setbacks, many still believe that Bitcoin and other blockchain-based cryptocurrencies will fundamentally change the world’s financial system. As a result, investment continues to pour into Bitcoin startups and many of those startups are offering Bitcoin APIs of their own.
With a growing number of those startups aimed at supporting institutional and mainstream consumer applications of Bitcoin, the broader adoption of security-oriented API platforms like BitGo’s could prove crucial if Bitcoin is to realize the potential so many believe it has.