It’s becoming increasingly clear that this Bitcoin thing is for real, but security remains a barrier to its mainstream adoption as a currency.
Some smart people are betting money that the security problem can be solved. A group of them have put $12 million into a Palo Alto, Calif.-based Bitcoin security startup called BitGo.
BitGo has a security-as-a-service platform that allows financial services and ecommerce businesses to secure Bitcoin transactions in their exchanges and marketplaces. The company also offers a secure online Bitcoin wallet for consumers.
BitGo says the new funding round was led by Redpoint Ventures, and, notably, former Verisign CEO Stratton Sclavos. Redpoint founding partner Jeff Brody and Sclavos (of Radar Partners) will join BitGo’s board of directors.
“We are still in the early innings of the Bitcoin revolution,” said Will O’Brien, chief executive officer and cofounder of BitGo. “BitGo’s mission is to secure the world’s Bitcoin. By solving Bitcoin’s early security concerns for our customers and industry partners, BitGo is excited to help the Bitcoin industry grow with what we believe will be a speed and scale comparable to the Internet itself.”
Also participating in the round were Bridgescale Partners, Radar Partners, Founders Fund, Barry Silbert’s Bitcoin Opportunity Corp., Liberty City Ventures, Crypto Currency Partners, Ashton Kutcher’s A-Grade Investments, and some individual investors.
Bitcoin wallets have previously been secured using a single-key encryption system, which creates a single point of attack for hackers. That led to many of the well-publicized security breaches in recent years. BitGo has developed a “2-of-3 key” multi-signature wallet in which three keys are issued and any two are required to sign a transaction.
Bitcoin is an increasingly popular decentralized, peer-to-peer virtual currency system that has a shot at disrupting traditional payment and money transfer systems.