Bitcoin security isbeing controversially tackled head-on by new London-based exchange Coinfloor.
In an interview with the Wall Street Journal, Chief ExecutiveMark Lamb said, “We are letting the entireworld audit our books, essentially. After the bankruptcy of Mt. Gox, we’retrying 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 beable to view from their wallets. The list will be generated by Coinfloorsending its entire stock of bitcoins from one of its accounts to another, andpublishing a code which individual customers can verify next to their balanceeach day.
The Challenge
Bitfloor is one of ahandful of new exchanges testing the proof of solvency model as a solution tonew and prospective users’ ever-growing skepticism of cryptocurrency as a homefor their investments.
The road toaccountability has not been straightforward since the service launched inMarch, however. Coinfloor has implemented unusual procedures in order toreassure clients of its gravitas as a holder of funds, with all transactionsrequiring three signatures before any bitcoins leave the service.
But when it appliedfor 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 withEuropean Commission and the result was that Bitcoin does not need to beregulated as money”. He added, “We’revery interested in getting regulated if they somehow change their minds”.
It is an interestingsituation indeed when a cryptocurrency exchange is killed by the kindness ofgovernment bodies’ lack of bureaucracy. But if Lamb’s sole aim in securing thisfeature is to distance the project from Mt. Gox fallout, there may well beother means to do so, especially as the community reacted largely skepticallyto the plan.
Shawn Sloves, chief executive of theAtlas exchange told the Wall Street Journal, “It’s a marketing ploy to make them feel trustworthy, and it’s sayingit on laymen’s terms.”
McAfee executive Raj Samani added, “There still exist multiple considerationsthat customers need addressed in order to reach greater levels of confidenceand to encourage wider adoption of Bitcoin,” something which appears to be especially truein the UK based on the surveys recently published about public opinion towards Bitcoin andcryptocurrencies.
Nevertheless,depending on how similar projects fare elsewhere in the world, new standardscould soon be set regarding exchange etiquette even before entities such asDATA produce hard-and-fast rules for best practice and obligations.