Dive Brief:
- A "virtual wallet provider" startup, BitGo, raised $42.5 million in venture capital funding to accommodate an exponential growth of corporate customers such as hedge funds, trusts and broker-dealers, reports Fortune. The company expects the bitcoin market to hit $100 billion next year.
- In contrast to traditional cryptocurrency wallets, BitGo has an additional cryptographic private key to co-sign transactions. The other two keys are used for "active use" and one for a safety backup.
- The bitcoin market is currently growing more than 1,000% year-over-year and is trading at about $16,500, according to Fortune.
Dive Insight:
The sustainability of cryptocurrency such as bitcoin is only as strong as its security. Just last week hackers walked away with about $70 million worth of bitcoin after a cryptocurrency mining service was compromised. Still, much of the burden of security is put on the users themselves.
There are anywhere between 5.8 million and 11.5 million "active" wallets, or those that can be used for splitting among a group of people, according to a University of Cambridge report. Active wallets are either online/exchange wallets or software wallets.
The safer of the two is the software wallet but it's only as safe as the hardware the software is downloaded on. But most wallets do not have "control access to user keys," according to the report.
As bitcoin becomes more common in enterprises, the sharing of effective strategies at mitigating risk and security are also expected to increase.
The self-operating nature of bitcoin forces about 80% of large exchanges to adopt outside security measures which sometimes includes third parties performing security audits, according to the Cambridge study. Additionally, about 79% of exchanges require employee-wide security training.
