Bitcoin exchange Vault of Satoshi today launched a full public proof-of-solvency service for its customers, saying it is the first digital currency exchange in the world to do so.
The "unapologetically Canadian" company has embarked on a string of compliance and transparency initiatives in the past months. In March, it received a full Money Services Business licence to operate in all provinces of Canada and serve international customers in listed countries.
Vault of Satoshi (VoS) said its new proof-of-solvency system is "not just an audit", but provides full proof via cryptographic trees that it holds all the bitcoins it claims to have in reserve.
Said Director of Marketing Adam Cochran:
"At Vault of Satoshi we have always tried to embody the mantra of being an open, honest and transparent exchange. We feel it's our duty to do so when you make the decision to place your funds in our hands.
For this reason we have long sought after a way to prove our reserves to the public in a safe and reliable manner, while most exchanges issue a third-party audit, we felt that simply wasn't open enough – so today at Vault of Satoshi we are proud to announce full proof of solvency and the publication of our cold wallet."
VoS said there may be a 5-6% discrepancy in total reserve value, as it has chosen not to publish its hot wallet address for security reasons.
Registered users can self validate both their balance and the overall reserves of the exchange by selecting 'BTC Proof of Solvency' in in the company's online Security Center.
"From there, load the partial tree list, select 'online tools' and copy paste in the relevant information to validate the holdings," Cochran explained.
Demand for transparency
The announcement comes at a time of increasing exasperation at the number of bitcoin-related services (and their proprietors) that have suddenly vanished along with their customers' money. There is also a noticable reluctance to act, at least in a timely manner, on these cases by financial authorities or law enforcement.
Rather than lobbying for greater regulation, however, bitcoin users are instead calling on exchanges and wallet services to be more transparent in their operations, and to provide other guarantees that customer funds exist and are secure.
It's likely the digital currency world will soon see a rush to transparency as trust becomes one of its most valuable commodities.
Exchange Kraken recently passed an independent audit of its reserves with flying colors. In turn, Ripple's Stefan Thomas published the results of his proof-of-solvency audit of Bitfinex on The Bitcoin Talk forum earlier this month, revealing a reserve ratio of 102.82%.
Blockchain has always allowed its users to retain full control of their private keys. Other wallet services, like China's Bifubao, have unveiled cryptographic 'Merkle tree’ checking techniques that customers can access for greater peace of mind.
Vault of Satoshi's new licensed Money Services Business status gives its Canadian and some international users a greater range of options when buying and trading digital currencies. It allows buying and selling via cheques, certified cheques, bill payments, the 'Interac' debit system, money orders, bank drafts, and bank wires.
The company also recently launched a 'Coin-to-Coin' feature that allowed customers to exchange any digital currency for another without needing to trade through one of the major currencies (ie: BTC or LTC). Non-verified users, who do not deal in any fiat currencies on the site, may also access this section of the exchange.
Bank vault image via Shutterstock