Bitcoin Core developer and current Coinkite advisor Peter Todd has been hired by the viacoin development team to work on a bitcoin 2.0 technology concept.
Todd will serve as chief scientist and advisor on both the viacoin core project and the decentralized smart contract platform ClearingHouse, which is being developed in tandem with viacoin. The primary focus of his work will be treechains[1], a concept created by Todd that allows for block chain scalability and side-chain coordination. As well, treechains promote a greater degree of mining decentralization – a key issue facing the digital currency community today.
According to the official announcement, posted on the viacoin development blog[2], Todd’s work will allow for greater versatility and complexity of block chain utilization – something that will enable the technology to be used on a larger scale in the broader economy. Tree Chains will ultimately be integrated into viacoin, serving as the basis of a broader build-out of its block chain and the protocols being developed for it.
Todd told CoinDesk:
“My goals with treechains are permissionless development, decentralizing mining, and making Bitcoin scale. I want to allow anyone with a new idea for a decentralized consensus system the chance to compete on a level playing field; treechains is that playing field.”
The growth of bitcoin 2.0
As a developer, Todd is no stranger to either decentralized smart block chain platforms or bitcoin 2.0 projects. In addition to his work with Coinkite as chief naysayer and the Bitcoin Core project, Todd has been involved with the development of mastercoin[3], Counterparty[4] and coloured coins[5]. Notably, Todd resigned from the Mastercoin project following the announcement that he was working with the viacoin team.
ClearingHouse, like Counterparty – a platform on which ClearingHouse is based – allows for the creation and deployment of a variety of smart contracts[6] and actions. Todd’s treechains concept enables greater coordination and communication between block chains, a potential application that would make smart transactions simpler to conduct.
As such, the impact on digital currency development is significant. Viacoin’s developer told CoinDesk:
“Giving Peter the necessary resources to research and develop treechains will have a lasting impact on decentralised consensus based systems. Mining centralization is an undisputed problem and if you extrapolate it to it’s logical conclusion, will spell the death of decentralised consensus.”
Bitcoin-to-gold website Coinabul LLC is facing a serious federal class action alleging that it defrauded some of its clients.
The leading plaintiff is Yazan Hussein, who claims he transferred 1,644.54 BTC to Coinabul[1] last year, but did not receive the gold he ordered.
The federal complaint was filed in Illinois on 25th July. It names Coinabul and its CEO Jason Shore as defendants. Hussein demands a jury trial.
Hussein turned to Edelson law for representation, the same firm heading the Mt. Gox class action[2] in the US. Chris Dore[3], a partner at the firm, told CoinDesk that Hussein reached out to the company after trying to resolve the Coinabul dispute for close to a year.
Dore explains:
“Once we were contacted by our client, we looked into it and this problem [is] widespread. There are countless complaints of people having the same experience where suddenly they stopped responding and stopped sending any product in exchange for the bitcoins. We did file it as a punitive class action and we do intend to pursue it as a class.”
Dore added that Edelson wishes to pursue the complaint as a civil matter[4] to ensure that all bitcoins involved in unfulfilled transactions are returned.
“The contracts that were entered into were simply not performed and [Coinabul] showed no ability or interest in performing those contracts,” he said. “What we want – and what we feel is best – is for all the bitcoins to be returned, and then everyone simply goes forward and that is the end of the case.”
Dore said Edelson has not been in touch with Coinabul yet.
No shipments since last June
The suit alleges that Coinabul[5] stopped honouring its sales more than a year ago, back in June 2013. However, Coinabul continued to take orders and accept bitcoin payments for precious metals it did not have in stock, the plaintiffs claim.
The complaint describes the nature of the case as follows:
“Defendants run an online marketplace called ‘Coinabul’ where consumers may exchange ‘bitcoins’ – a new form of digital currency – for physical denominations of silver or gold. Unfortunately, rather than delivering the metals promised to their customers, defendants chose to capitalize on the lack of effective regulatory oversight in this burgeoning industry, and instead defrauded their customers out of millions of dollars worth of bitcoins.”
The plaintiffs claim Coinabul stopped shipping the promised gold or silver and thus unlawfully misappropriated millions of dollars worth of customers’ bitcoins.
Delays, excuses, more delays
The complaint states Coinabul unexpectedly stopped shipping precious metals to their customers approximately two years after it was founded in 2011. This caused a backlash, especially on bitcoin forums such as bitcointalk.org[6].
Coinabul responded to the controversy by taking part in online discussions and apologising for “longer-than-usual delays”.
The company went on to issue additional ambiguous statements in an attempt to alleviate customer concern over the unfulfilled orders. Then, in July 2013, Coinabul sent an email to customers claiming that it was unable to find a bank willing to take its business.
However, in the email Shore claimed that a “large portion of outstanding orders” had already received tracking numbers and were en route to customers.
The complaint alleges the company never stopped accepting bitcoins for new orders, although it had no intention of fulfilling them.
Hussein’s history with Coinabul
Hussein claims Coinabul still owes him 1,644.54 BTC. The unfulfilled orders were placed between 22nd-24th June last year.
Prior to these unfulfilled orders, Hussein spent approximately 1,400 BTC on gold coins and bars from the website. However, these shipments were fulfilled within several weeks.
Dore explained:
“The long and the short of it is that he last year did some successful business with Coinabul where he transferred bitcoins and they gave him precious metals. He tried to do it again and transferred the bitcoins over and nothing came back. Time passed and time passed.”
After noticing that his last two orders were not fulfilled in a reasonable timeframe, Hussein began contacting Coinabul in July 2013.
Following an email exchange he decided to ask for his money back on 4th September. However, Coinabul informed Hussein that he was at “the mercy of the banks” and that the company could not fulfil any orders.
Over the next few months Hussein said he merely got vague excuses for why his orders were not shipped. Eventually he decided to take legal action.
Crucially, the complaint states that the exact number of class members is unknown to the plaintiff, but it points out that Coinabul received “over a thousand” orders. It is unclear how many of these remain unfulfilled.
“We have been contacted by other people, so it’s definitely not isolated,” said Dore. “I can’t really say [how large the class is]. It’s not gigantic, if I had to guess, I would say it’s in the thousands.”
One of bitcoin’s biggest mining infrastructure providers, BitFury, has launched a new hosted mining service for business customers.
The company claims the scheme will provide customers with “optimal and reliable” – but low-cost – hash power to maximise the return on their investment.
BitFury says its ASICs and specialised mining hardware have established it as the market leader in both constructing and managing computing centres for mining operations. According to the company, approximately 40% of all bitcoins are mined using BitFury-made chips.
DigitalBTC[1] and CryptX became the first clients to use BitFury’s managed mining services, which are not available to all customers.
From Georgia with love
The firm says its computing centres are managed around the clock by a team of engineers and benefit from locations with low energy prices.
BitFury secured $20m in funding[2] earlier this year, investing much of this capital into expanding already extensive mining operations in Finland, Georgia and Iceland. The company says it constructed a new 20MW data centre in Georgia in just 30 days.
Valery Vavilov, CEO of BitFury said in a release:
“Mining has become more than just hardware, and we are excited to offer managed services to enable customers to benefit from our specially designed data centres and cheap energy prices from clean energy sources.”
CryptX and DigitalBTC pleased with performance
CryptX and DigitalBTC, the two clients trialling BitFury’s managed mining services, say they are pleased with the performance so far.
Last week DigitalBTC, the first bitcoin-centric company to trade on a major mainstream stock exchange[3], reported its quarterly earnings[4]. The figures revealed that the company has already managed to recoup its original $4m investment in BitFury-branded miners and services.
“We’ve found the BitFury Group to be an invaluable partner as we have built up DigitalBTC into a significant bitcoin miner and the world’s first listed bitcoin company alongside our other bitcoin operations,” said Zhenya Tsvetnenko, the company’s executive chairman.
“We’ve trusted the BitFury Group to help us support and manage millions of dollars in capital investment, and they have more than repaid that trust.”
Bert Valkenborgs, CEO of cloud mining firm CryptX, commented that professional hosted mining operations are likely to be the future of the mining market.
BitFury is not the first company to offer comprehensive hosted mining services. Cloud mining started taking off last year and UK firm CloudHashing led the way, offering bitcoin mining-as-a-service[5] in mid-2013. CloudHashing eventually merged with HighBitcoin to form PeerNova[6], which now sells mining infrastructure services at an enterprise level.
Bitcoin ASIC designer CoinTerra announced several hosted mining services[7] back in May, starting at $999 for a 12-month 200GH/s rental. The company said the move will allow it to deploy orders more rapidly than its competitors, making the most of its hardware.
In all the excitement yesterday over Wikipedia’s new partnership with Coinbase, another significant piece of news from the bitcoin company got rather overshadowed.
Notably, the payment processor announced[1] that it will waiver all fees for registered 501(c) non-profit organisations accepting bitcoin through its merchant tools.
On its blog, the company explained why the move is beneficial for charitable organisations to start accepting the digital currency:
“The Internet has made it easier for non-profits to operate by enabling them to increase geographic reach and reduce the overhead required to fundraise. Adding bitcoin as a donation option is a natural next step for non-profits because it eliminates one of the most significant costs remaining – payment processing fees.”
The announcement continued that any non-profit accepting bitcoin through the company would be able to instantly exchange its bitcoin donations for US dollars and receive a daily bank transfer without incurring any costs.
Lower costs boost causes
At any charitable organisation overheads inevitably eat into donations, taking away much-needed funds from the intended recipients of the money. Charitynavigator.org even cites some highly-rated charities losing over three-quarters[2] of their funds in this way.
The percentage of funds lost to expenses is an issue that charities themselves take seriously and one that can sometimes put people off giving.
Along with premises, staffing and other day-to-day essentials of running an organisation, donations will often incur fees from payment networks for their services. While PayPal offers a slightly lower rate for non-profits (2.2% + 30 cents per transaction, down from a standard charge of 2.9% + 30 cents), credit card tend to incur standard charges of around 1.5-3%[3].
Bitcoin, however, enables donors to give virtually 100% of their donation to the intended charity, with only a tiny fee going to miners.
Coinbase said that US donors may also enjoy significant tax deductions based on their bitcoin-denominated donations, although this may not be the case in every country.
Crypto-friendly charities
Apart from Wikipedia[4], most major non-profits do not yet accept bitcoin donations. However, some (such as UK charity Comic Relief[5]) have said they are considering accepting the digital currency in the near future.
In particular, the dogecoin community has proven very supportive of efforts to spread goodwill by donating to those in need, recently fundraising for a charity: water[9] campaign to build much-needed wells in a drought-hit region of Kenya[10].
Philippines-based website Bitstars.ph has developed a novel way to get bitcoins into thousands of new hands, and demonstrate the network’s utility for micropayments and tipping, with a worldwide ‘selfie’ competition.
The site[1], launched in alpha on 1st June, already has over 1,100 registered users who have submitted over 10,000 photos. Of themselves.
A selfie, in case you hadn’t heard, is a photo you take of yourself and then usually upload to a social network. Upload them to Bitstars.ph as well and you have the chance to earn bitcoin tips in addition to all those ‘Likes’.
Miguel Cuneta, Co-founder and CCO of Bitstars.ph’s parent company Satoshi Citadel Industries[2] (SCI), told CoinDesk the project has a dual purpose. He said:
“The main concept was to find a way to monetize ‘Likes’ using Bitcoin and make people get to know about the concept of Bitcoin using a familiar medium – social media.”
How Bitstars.ph works
Now, as well as ‘Liking’ a photo, you can also leave a small bitcoin tip for the user. Tips average around 8 mBTC, and the site has a daily competition for the most popular selfies. Prizes range from about 200 pesos ($5) to 500 pesos ($12), which Cuneta said was around the median daily wage for a Philippines-based 9-5 worker.
Prizes depend on the number of user submissions over the course of a day. To encourage participation, users may now also earn small amounts of bitcoin by liking an voting as well. Winners can opt to donate their prize money to charity.
Bitstars.ph is open to anyone in the world with an Instagram or Facebook account, with users able to log in using those credentials.
Topping the ‘most popular’ lists are selfies which are funny, creative, silly, colorful, and adventurous. No particular theme or style dominates the winner lists – of course, being attractive always helps but it’s no guarantee of success.
The ‘selfiest’ city in the world
It’s not surprising Bitstars.ph was born in the Philippines – locals simply love taking selfies. Makati City, part of the greater Metro Manila area, was recently ranked #1 in TIME Magazine’s “Selfiest Cities in the World[3]” analysis. Manhattan and Miami were #2 and #3 respectively. Cebu City, also in Philippines, came in at #9.
The analysis was based on the number of times the #selfie tag was applied to over 400,000 photos uploaded to Instagram.
The Philippines population is 100 million, 40% of whom have internet access and one in four owns a smartphone. Facebook gets more eyeball-hours than TV with 30 million users.
Cuneta added:
“Filipinos are very social people. We use social networking to communicate with friends, get news about everyday events, news about our loved ones here and abroad (geographically, the Philippines is spread out over many islands, and globally, 10% of the population work abroad), and as a way to connect professionally and recreationally.”
Mission to promote bitcoin awareness, usage
Parent company Satoshi Citadel Industries calls itself a “provider of bitcoin solutions” and manages a range of different digital currency services and sites.
It also manages merchant services site Bitmarket[4], in-beta exchange Coinage[5], and remittance service ReBit[6]. SCI is also rolling out pre-loaded bitcoin cards as another fast way to get bitcoins into beginners’ wallets.
Cuneta continued that local awareness and adoption of bitcoin remained SCI’s main focus for now. Given that the Philippines is probably the world’s largest social media market, it seemed natural to integrate bitcoin somehow.
“By making bitcoin accessible in fun and familiar way, we also eliminate that barrier of bitcoin being perceived as too techy or complicated for the average user. Bitstars.ph is our innovative take on the concept of a bitcoin faucet. It’s fun, it’s easy, it’s simple, and you can win some money while doing something you would normally do for free.”
He said he hoped as the concept became more popular users could earn good money from their photos, a concept that could then expand to cover music, art, and other media.
The Tokyo Metropolitan Police Department has launched an official investigation into possible illicit activity surrounding the closure of Japan-based bitcoin exchange Mt. Gox.
The news comes roughly five months after the bitcoin exchange reported it lost roughly 744,400 BTC[1] – then about $350m in customer funds, and about one month since Mt. Gox was approved for its Chapter 15 bankruptcy[2] in the US.
“We decided to launch an investigation as we concluded this case could be connected to criminal activity.”
Tokyo police told the media outlet that they suspect roughly 27,000 BTC[4] were stolen from the website.
Using past figures, however, as many as 544,000 BTC could theoretically be uncovered by the investigation, as Mt. Gox later confirmed that it found 200,000 BTC[5] in an old bitcoin wallet in March, reducing its total estimated number of lost bitcoins.
Investigation ongoing
The news, while vague as to how police will seek to carry out their mandate, is potentially encouraging to former exchange users still waiting for any action that could help recover their lost assets.
Lawyers representing the exchange’s former users and current creditors, for instance, have reported that they have been blocked from conducting any fact-finding into Mt. Gox KK, the company’s Japanese entity, since it was granted initial bankruptcy protection in the US.
Still, in comments to CoinDesk, representatives of the Edelson law firm suggested that they believe that any wrongdoing was perhaps the result of activity at the exchange itself[6], not necessarily any outside parties. It is unclear whether the new investigation is focusing on the company or on any alleged cybercriminal activity.
Mt. Gox has officially maintained that it lost the customer funds because hackers were able to exploit bitcoin’s transaction malleability[7] – a process by which exchanges between Mt. Gox users were identified, though this claim was widely disputed[8] by the community.
Police activity escalates
The announcement also comes amid an alleged increase in police activity related to digital currency in Japan.
For example, Japan’s Ministry of Economy, Trade and Industry first introduced a plan for how it would monitor illicit trade involving digital currency this May[9]. This initiative would find the government agency working with other peer organisations such as the Financial Services Agency and National Police Agency.
That same month, police forces in Tokyo and Fukuoka carried out what was said to be the country’s first bitcoin-related arrest, when a 38-year-old bitcoin user was arrested for allegedly importing illegal stimulants[10].
To date, Overstock.com has proved a pioneer in bitcoin advocacy, helping push a number of major merchants to consider accepting digital currency when it became the first marquee name to do so this January.
Now, in a new interview with CoinDesk, CEO Patrick Byrne[1] has opened up about how Overstock may be seeking to further develop its plans for promoting decentralisation in the global financial market.
The Utah-based e-commerce giant launched a new open-source wiki page on its website on 29th July. Entitled ‘How to issue a cryptosecurity’, the page provides a broad overview of the topic, and lists the pros and cons of the various major players in the marketplace including Counterparty[2], Ethereum[3] and NXT[4]. The offerings all allow users to trade securities person to person, without a centralised mediator such as a stock exchange.
Speaking to CoinDesk about the wiki, Byrne confirmed that the page seeks to crowdsource opinion from the digital currency community so that the company can shape its opinion on whether it would be able to introduce such an offering.
Choosing his words carefully, Byrne said:
“I can’t say that we have the intention to actually do it, but I can say that my intention is as firm as the intention can get while being still exploratory. If it gets any more solid, I will have to notify the Securities and Exchange Commission (SEC).”
If introduced, Overstock would be the first publicly traded company to also offer a cryptosecurity as an option to investors. Byrne suggested any Overstock offering, should it move past the exploratory phase, would not be focused on raising revenue, saying:
“If we hypothetically issued such stock, it would really be in a small amount. […] We’re doing it because we want to figure out how to do it and show how to do it [so] other people can fund their companies using the system we develop.”
Cryptocurrency crowdsales[5] have become an increasingly popular and sometimes contentious way for bitcoin startups to launch and raise money, with leading Canadian exchange CAVIRTEX[6] and the now defunct Neo & Bee[7] providing notable examples of the varying results produced so far through this approach.
Eliminating corruption
Throughout the conversation, Byrne stressed that he believes that cryptosecurities have the potential to vastly impact the traditional investment industry.
Noting how he thinks cryptosecurities could be even more powerful than cryptocurrencies in the long term, Byrne remarked:
“If every payment went to bitcoin, it would be a $16tn industry. If every exchange on the stock market went to a cryptosecurity it would be a $4qn industry.”
Byrne went on to suggest that he believes the Depository Trust & Clearing Corporation[8] (DTCC), a financial services company that provides clearing and settlement for the majority of securities transactions, should be disintermediated by a block chain-based solution, and that doing so could prove more valuable to society than replacing central banks.
“The central bank is not good institutional design, it’s bad institutional design,” Byrne said. “It’s good people trying to do the right thing. […] In the case of the DTCC, I think that it’s a corrupt organization that shows [the] influence of organized crime.”
Cryptosecurities, he asserted, hold the potential to eradicate the need for such centralized parties, and any steps toward this future, he suggested, would be beneficial.
How the offering could work
Though the specifics of any final offering would likely be shaped by any cryptosecurities exchange platform Overstock chooses, the end result would aim to be similar to a traditional common stock, with the same associated economic and legal rights.
Byrne stated:
“Hypothetically, we would want to make it as close to an equivalent to our common stock as possible and trade at the same price.”
Speaking to CoinDesk in the past, some of the burgeoning sector’s major players, however, acknowledge that the legality of securities trading using decentralised block chain-based platforms is still murky[9], especially as laws around traditional crowdfunding remain opaque.
Still, without guidance from the SEC, Byrne suggested that Overstock could seek to be the company that raises the issue, adding:
“We’re open-sourcing how to create an alternative to the current corrupt institutions that dominate Wall Street. If their lap dog, the SEC, subpoenas me, I intend to open-source their subpoena and open-source my response. And when the DOJ indicts me, I’ll post that online and we’ll open-source our response to that.”
Obstacles ahead
Should Overstock go ahead with such a proposal, it acknowledges it would likely encounter a number of issues. The wiki page currently names exchange recordkeeping and legal requirements, for example, as two areas that need further clarity.
In part, Byrne explained, the company’s new wiki page is an attempt to find solutions to these obstacles. He said:
“We’re basically open-sourcing the answers. Instead of asking some law firm to spend $1m to try and figure it out, we’re turning it over to the world and say ‘Hey you folks who want to see this happen, come and help figure out some of these questions on our wiki’.”
Still, Byrne cautioned that while he’s enthusiastic about the project, the SEC will have the final say on whether Overstock could even issue a cryptosecurity.
“I agree that it’s too exploratory to do now, but that’s why we have the blank wiki page,” Byrne said. “As the issues get resolved on that wiki page it will become less and less risky.”
In particular, Byrne suggested that Overstock is hoping securities lawyers and stockbrokers can contribute to the page as it continues to explore the possible offering.
To learn more about Overstock’s proposal, visit the full wiki page[10].
We’re fortunate that millions of people all over the world support the work of the Wikimedia Foundation through donations. It has always been important to the Foundation to make sure donating is as simple and inclusive as possible. Currently, we accept 13 different payment methods enabling donations from nearly every country in the world, and today, we’re adding one more: bitcoin.
For those unfamiliar with bitcoin, it’s a relatively new digital currency, currently being accepted by a growing number of institutions and merchants throughout the world. Members of our community have asked the Foundation to start accepting bitcoin. These requests, coupled with recent guidance from the US Internal Revenue Service[1], encouraged the Foundation to once again review our capacity to accept bitcoin.
During this review, we identified a new way to work around past technical challenges, as well as to minimize the legal risks of accepting bitcoin. Through our work with Coinbase, a bitcoin wallet and payment processor, we’re able to immediately convert bitcoin to U.S. dollars, requiring minimal technical implementation on our end. Since we now also have guidance on how to account for bitcoin, there is a clear understanding of how to legally manage it.
If you are interested in donating bitcoin to the Wikimedia Foundation, you can now do so on our Ways to Give[2] page. Thank you again to all our friends and supporters. Your support enables us to realize the Wikimedia vision – a world in which every single human being can freely share in the sum of all knowledge.
Lisa Gruwell
Chief Revenue Officer, Wikimedia Foundation
2014-07-30: Edited to clarify implementation details
Patrick Byrne, CEO of Utah-based e-commerce giant Overstock.com, has announced that the company intends to expand its bitcoin payments program to international customers in the next four to six weeks.
To date, the option to pay for purchases in bitcoin has only been available to US customers, in what has become a similar offering for the industry’s major merchants. Dell[1], for example, only allows US-based customers to pay in bitcoin, while Expedia[2] limits the offering to its US website. Notably, TigerDirect[3], which uses BitPay for its processing, has expanded its offering to Canada.
News of the international payment option first surfaced during a TV interview Byrne gave to Russia-based, English-language news source RT‘s “Boom Bust”[4] program.
Byrne said in the broadcast:
“In about one month to six weeks, we’ll be introducing bitcoin to our international customers, so [customers], including those in Russia, will be able to pay in bitcoins.”
Throughout the interview, Byrne was overwhelmingly positive about his company’s experience with bitcoin, lauding the service provided by its merchant processing provider Coinbase and remarking that it “hasn’t had a hiccup since we started”.
“We’ve integrated with all kinds of payment systems and this is the first that I can think of where there’s been no hiccups at all,” Byrne added.
Byrne further revealed that the company is now issuing refunds in bitcoin, and that its customer service agents have been facilitating the offering for one month.
Market influencer
Byrne also used the interview to further position Overstock as a major influence within the broader e-commerce community, noting that he believes the company’s announcement marked a milestone in bitcoin merchant adoption.
Byrne said:
“We like to think that we broke the ice, I think before us the biggest merchant was about $1m, so by us doing it, we’re a billion-and-a-half-dollar merchant, we like to think we saved [bitcoin] about four to five years of evolution.”
The CEO went on to say that, even from a purely public relations standpoint, bitcoin is a no-brainer for other similarly sized businesses.
“We got fantastic PR from [accepting bitcoin],” Byrne said. “Now, that it’s broken into the billion-dollar vendor market, it’s just a matter of time before the other dominoes fall.”
Expecting success
In his comments, Byrne suggested that bitcoin purchases now account for one-quarter of 1% of the company’s sales, but that the pace of sales from this market segment is increasing.
Byrne went on to state that he believes both international sales and time will boost this figure, stating:
“This isn’t just a US phenomenon, this is happening all around the world.”
Coinbase confirmed to CoinDesk that should Overstock seek to expand its bitcoin payments program it can do so with its services. The company pointed to its recent integration with global e-commerce and logistics solutions provider Bongo International[5] as an example of a partner that accepts global payments.
To learn more about the announcement, listen to the full interview here:
Open-source wallet management platform Armory Technologies has released Lockbox, a new feature it claims is the world’s first decentralised multi-signature interface for bitcoin.
Version 0.92[1] of the Armory client now has a new user interface that allows users to carry out multi-signature transactions[2], offering claimed “high-security storage”, as well as opening up new possibilities for bitcoin contracts and escrow services.
The Armory client lets users manage multiple wallets and maintain offline wallets, as well as other features[3].
Flexible multisig
Armory[4] says its new Lockboxes do not require any third-party services and that they give users complete control over the generation and storage of all cryptographic keys.
Furthermore, each Armory signing device can generate its own wallet even when it is offline – a useful feature for keeping bitcoin in ‘cold storage’, away from the inherent risks of Internet-linked devices.
The company says Lockboxes are very flexible, allowing users to choose any multi-signature combination from 1-of-2 up to 7-of-7, with each increase requiring more signatures to release funds from the wallet.
The company said:
“There are many possible ways to use lockboxes. A basic 2-of-2 scheme may be appropriate for a husband and wife who want their savings to require both of their signatures. A complex 5-of-7 scheme may be appropriate for a large financial institution or hedge fund desiring to widely distribute signing authority among trusted executives, trustees, or even insurance providers.”
Armory says that most other multi-signature services only provide a single type of multi-signature and also require third-party services or signers. The fact that such systems generate multiple private keys on the same system, which then pass through the same channel, creates a “point of failure” in the system, the company asserts.
Crowdfunding contracts
Armory 0.92 also features support for simultaneous funding or ‘simulfunding’, which is basically a simple bitcoin contract. All parties involved in a funding effort need to specify how much they are willing to contribute, then combine the contributions into a single contract-backed transaction.
The transaction is finalized only when the contract is executed in full, in which case, all the funds are transferred at the same time. If the contract is not executed, no transaction takes place. The bitcoin network enforces the agreement, eliminating the need for trust between the parties.
The company said:
“Armory is the first wallet to implement this powerful feature and make it accessible to advanced users. Additional use cases could include crowdfunding, donation drives or even roommate rent collection.”
The company says it is on track to release Armory version 1.0 soon and that it will include a new API for enterprise integration and a ‘supernode’ mode that it claims will “replace the need for third-party services in your bitcoin management platform”.
