Software engineer and bitcoin angel investor Ben Davenport is departing from a three-year stint at Facebook to join BitGo – a company that helps users and organizations better secure their bitcoin funds.
Davenport, who has early-stage invested in at least seven bitcoin startups since 2011, will join as head of product and co-founder, he told CoinDesk, adding:
“The way I think about Bitgo is it’s a pioneering leader in security for bitcoin.”
BitGo and multisig
Davenport pointed out that BitGo was one of the first companies to release a multi-signature (or ‘multisig’) bitcoin wallet – a more secure way of storing bitcoins.
Most wallets in use today rely on one public and one private key – the latter being all that is required to release funds. Loss of that key means the funds will no longer be accessible, and theft of the key may result in the funds being stolen.
Multisig, however, uses several private keys, more than one of which (for example, two of three) must be signed before funds will be sent. Redundancy is also provided, so, if one of the keys is lost or compromised, the funds can still be controlled, providing the other keys are still held.
For its consumer wallet, BitGo currently uses three keys: one for the user, one for BitGo and one stored in offline backup. At least two of the three keys are needed to access the wallet.
Since two keys must be signed to access the wallet, there can be no single source of intrusion, meaning a hacker would somehow need to obtain more than one key to gain control of the funds.
However, the company plans to concentrate on providing more complex schemes for organizations through its enterprise product. To that end, BitGo is building an advanced set of tools to be used as the bitcoin variation of traditional corporate accounting software.
“This is really bringing the same type of [multisig] technology to companies that want to hold and transact bitcoin,” said Davenport.
Larger organizations are by nature complex systems. Companies have different levels of management from the CEO downward, and then there is the accounting department that is tasked with moving money around.
“All those people need to transact with bitcoin, but need to be able to have business roles in place,” explained Davenport. “Spending limits, velocity limits and approval chains.”
That’s where BitGo sees an opening: providing organisations with the ability to better control bitcoin process and procedure in the form of multiple private key signatures. This, along with its cold storage product, will offer enhanced security for enterprises.
Multisig also provides granularity in the form of access clearances for bitcoin transactions, said Davenport, adding:
“That sort of thing doesn’t exist for bitcoin today and that’s one of the things that BitGo will be enabling.”
BitGo won’t just be targeting traditional companies with its products either, said Davenport, adding that the company will be “empowering other bitcoin businesses – from exchanges to mining pools and even other wallets.”
Growth of multisig
Multisig is expected to become the standard for bitcoin wallets over the next few years, since one key simply does not provide enough security.
A former Google employee, Davenport started working at Facebook after its acquisition of startup Beluga, a company he co-founded.
He has an AngelList syndicate where he and other accredited investors have been funding bitcoin startups.
BitGo has received funding from Bridgescale Partners, Bill Lee and Eric Hahn, and, true to his role as a bitcoin angel, Davenport has also invested in the startup:
“I have small monetary investment in it. But the primary investment is my time.”