Jay Addison Technical and Media Advisor for CryptoBiz Magazine interviews Will O'Brien CEO & Founder of BitGo. BitGo, the leading bitcoin security platform and a pioneer in multi-sig technologies. Will is also an angel investor and advisor to early stage startups. He previously held executive and leadership roles at Big Fish Games (social casino, casual games), TrialPay (in-app payments and advertising), Random Walk Computing (real-time trading technology) and has founded and operated his own startups in consumer Internet and media.
Transcript
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This is Jay Addison live at InsideBitcoins in Las Vegas with Will O'Brien, the CEO of BitGo. How are you doing today, Will? Good, thanks. What's the best and safest way to store large amounts of Bitcoin?
Well, BitGo operates an enterprise security platform for Bitcoin, and our customers are holding large amounts of Bitcoin. We found that when you're holding large amounts of Bitcoin, you need to elevate the security. You need to think about using standards like multisig, using standards like HD wallets, and setting up some of the similar protections that you find in fiat currency, like spending limits and account rolls and access rolls. So BitGo Enterprise is a platform that our customers use from financial service customers to miners to e-commerce and across the board large holders.
We found BitGo Enterprise is really the best product in the market today for storing large amounts of Bitcoin. Well, that's great to know. For our audience, it's great to know because we've got a lot of people in the traditional financial sector that probably would like to get into the Bitcoin sector, but they just don't know where to store these things without somebody hacking them kind of thing, right? Yeah, there is really a learning curve.
It is. There is a learning curve, for sure. It is a challenge to learn how Bitcoin works, and so our product, BitGo Enterprise, really makes that easy so that we're helping an organization use Bitcoin in the way they're familiar with, like fiat bank accounts. That makes sense.
When do you think that we will have cold storage or multi-sig solutions that an average non-techie can use without feeling intimidated? Right. Well, currently we're in a cold storage ice age. We have a lot of the Bitcoins locked up in single key cold storage.
And the first thing we need to do is as an industry come together and embrace multi-sig as a standard. Multi-sig is a critical and very valuable security involvement evolution. BitGo pioneered multi-sig back in August of 2013. We launched the first commercial implementation of it.
And now over a year later, we're in the process of launching a new version of it. And it's a big deal. So we're going to be launching it in the next year or two years. And then we're going to be launching a new version of it.
And then we're going to be launching a new version of it. And then we're going to be launching a new version of it. And then we're going to be launching a new version of it. So the first thing that large institutions, large holders of Bitcoin need to do is embrace multi-sig.
Service providers like consumer wallets embrace multi-sig to ensure the security that we don't have another Mt. Gox scenario. And then as those service providers get up to speed on security, then I think we'll start seeing easy, easy to use services like the Coinbase and Circles of the World. But they're secured, but all of them being secured with multi-sig.
And some of them have already embraced multi-sig, but we want to see a lot more of it. So for our non-technical audience, can you give us a quick explanation of multi-sig? You bet. So multi-sig is the digital equivalent of a safe deposit box.
When you walk into your bank, you have a key and the banker has a key. And both keys have to be put in at the same time, turned at the same time in order to access that box. So that's very similar to what we're doing with multi-sig on the blockchain. BitGo holds one of the three keys.
The second key is held by the customer. And the third key is generated offline and stored online. And the third key is stored as a backup. So it's a safe deposit box with kind of a magic key in case you lose one of the keys or in case one of the parties is unavailable.
Every time that a transaction is signed using a BitGo wallet or using the BitGo platform, we act as a cosigner and a security layer on that transaction. So you would log into BitGo. You'd say, I want to send five Bitcoin to this other party. And then that transaction would be signed by you in the browser using your passcode, which uses your key.
And then that transaction would be sent to our server. And then that transaction would be sent to our servers where we run a series of fraud checks, corporate treasury checks like spending limits. And make sure that you are who you are through authentication like two-factor authentication. And make sure that you have the rights to send.
If all that passes, we cosign that transaction and send it to the blockchain. So it's just similar to how when you walk into the bank, the banker checks your ID and then they open the safe deposit box with you. Okay, that makes sense. With the proper multi-sig implementation, do you still think there's a need for cold storage?
Well, cold storage is really a question of, you know, what's the best way to do it? You know, you can't just go in and say, I'm going to do this. I'm going to do this. I'm going to do that.
I'm going to do that. You know, you can't just go in and say, I'm going to do that. So you have to think about the possibility of, are you going to use the bitcoins or not? So if we're using the bitcoins for commerce, for remittance services, for trading and so forth, then cold is not the best model.
But cold is a great model for long-term holdings. So if you have a Bitcoin ETF someday and maybe some percentage of that should be cold, but it should be cold and multi-sig. Any storage that is single key, cold or not, is vulnerable to theft and loss. And that's something we have to do away with in the industry.
How much personal information do I need to share with BitGo if I want to set up an account and use your service? So we, you can, as an individual, you can come sign up with BitGo using your email address, creating a password. That's the identifying information and then a mobile phone number for two-factor authentication. We also use a platform called Authy for two-factor authentication.
That's the extent of the information that we gather if you're just using our free web wallet, which is a great solution if you just have a single holder of the large amount of Bitcoin. If you're using BitGo Enterprise, which is our SaaS product that's used by financial service customers and many others, then we enroll you, we take you through an enrollment program where we do learn about your company and make sure that you are running a legitimate business and that you can be onboarded for our terms of service. So you guys also allow users to do things like set spending limits. Do you also offer or plan to offer an automated risk assessment system?
Yeah, we already have that. So we have a number of checks in the back end. So think about what your credit card does for you. If you're out of town or out of country and there's a large transaction, bought something or spent a lot of money on a dinner, your credit card company will call you and say, hey, was this your transaction?
So those types of fraud checks don't exist in the blockchain because blockchain is distributed and peer-to-peer and trustless. So BitGo acts as a service provider to operate a number of all kinds of transactions. So we have automated risk assessment tools as well. And if we see something that doesn't look like a transaction we should sign, we don't sign it.
We ask for secondary approval from somebody, from an admin on that wallet. So a typical organization would set up their wallet where they would have C-level officers as admins on the wallet, maybe the finance team as spenders on the wallet and an outside auditor, whether it's a big four auditor or their accountant who can have view only access to that wallet. So we map Bitcoin to that organization. Help them run their process.
We've had customers like the Bitcoin Foundation, Bitfury, one of the largest miners, Binary Financial, one of the US-based hedge fund, many others who are using the system to scale their financial operations. Does BitGo always have access to my entire spending history? BitGo, well, the blockchain has your entire spending history. Of course.
And we do capture all that data in a place where you can have industry grade reporting, audit and data. Download reports, export reports, have your account access reports. So yes, it is a feature that we have. We obviously maintain privacy.
Privacy is really important. We employ a new technology called HD, which stands for hierarchical deterministic wallets. It's a standard that was defined in BIP32, which is a new improvement to the protocol. And what that allows you to do is use unique Bitcoin addresses for every single transaction so that on the blockchain there's no appearance of where the Bitcoins are flowing.
So nobody on the outside is going to be able to tell what your transactions look like because they won't know how all those addresses connect. But BitGo pulls them all together in a very convenient, easy reporting tool. If I want to store my Bitcoins with BitGo, so that I can buy the sounds of things, you guys got a great system on the go. What's my cost for that?
So we do have a free web wallet, which is kind of a showcase piece for individuals. But if you're an organization, we have a SaaS model that ranges from, for a sole proprietor, $20 a month. For a small business, $250 a month. For a large business, $1,000 a month.
And for a hedge fund, something on the order of 2.5 basis points per month. So you can think of annually for a large financial institution, this would be about 30 basis points for secure storage, secure transactions, and other capabilities. That's pretty exciting stuff. So let me ask you the one question that we ask everybody, and half the people don't want to answer.
January 1st, 2015, what do you think the price of Bitcoin is? Yeah, I try not to watch the price too obsessively. Well, so far we've got guesses all over the map. Yeah.
I think the price, what are we in today? October, so we've got three months to go. I think the price will be back over $1,000. Wow, that's pretty good.
We're with Will O'Brien. Thank you very much. You've been fantastic today. And I hope, what's your address if people want to get to us?
Is it bitgo.com? Yeah, it's B-I-T-G-O, bitgo.com. Fantastic. Thank you very much.
All right. Thank you. This is Jay Addison from Crypto Biz Magazine, live from Mckler Media's Inside Bitcoin's conference in Las Vegas. Remember to subscribe to Crypto Biz Magazine at CryptoBizMag.com.
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