Bitcoin security is being controversially tackled head-on by new London-based exchange Coinfloor.
In an interview with the Wall Street Journal, Chief Executive Mark Lamb said, “We are letting the entire world audit our books, essentially. After the bankruptcy of Mt. Gox, we’re trying to make a stand for accountability.”
The plan, known as proof of solvency, is to publish encrypted lists of accounts and balances which customers will be able to view from their wallets. The list will be generated by Coinfloor sending its entire stock of bitcoins from one of its accounts to another, and publishing a code which individual customers can verify next to their balance each day.
Bitfloor is one of a handful of new exchanges testing the proof of solvency model as a solution to new and prospective users’ ever-growing skepticism of cryptocurrency as a home for their investments.
The road to accountability has not been straightforward since the service launched in March, however. Coinfloor has implemented unusual procedures in order to reassure clients of its gravitas as a holder of funds, with all transactions requiring three signatures before any bitcoins leave the service.
But when it applied for regulation by the Financial Conduct Authority (FCA), it was turned down. Lamb cleared the air about this in an interview with CNBC, saying “when we applied to be regulated, they [the FCA] discussed this with European Commission and the result was that Bitcoin does not need to be regulated as money”. He added, “We’re very interested in getting regulated if they somehow change their minds”.
It is an interesting situation indeed when a cryptocurrency exchange is killed by the kindness of government bodies’ lack of bureaucracy. But if Lamb’s sole aim in securing this feature is to distance the project from Mt. Gox fallout, there may well be other means to do so, especially as the community reacted largely skeptically to the plan.
Shawn Sloves, chief executive of the Atlas exchange told the Wall Street Journal, “It’s a marketing ploy to make them feel trustworthy, and it’s saying it on laymen’s terms.”
McAfee executive Raj Samani added, “There still exist multiple considerations that customers need addressed in order to reach greater levels of confidence and to encourage wider adoption of Bitcoin,” something which appears to be especially true in the UK based on the surveys recently published about public opinion towards Bitcoin and cryptocurrencies.
Nevertheless, depending on how similar projects fare elsewhere in the world, new standards could soon be set regarding exchange etiquette even before entities such as DATA produce hard-and-fast rules for best practice and obligations.