Technology

Bitcoin Exchange Wins Storage Stamp Of Approval

Tom Burroughes Group Editor 26 September 2014

Bitcoin Exchange Wins Storage Stamp Of Approval

Netagio, the UK-based Bitcoin, gold and sterling exchange, says it has attained assurance of the storage of Bitcoins it holds from professional services firm BDO, a key step in bolstering credibility in the use and exchange of this controversial digital money.

Netagio, the UK-based Bitcoin, gold and sterling exchange, says it has attained assurance of the storage of Bitcoins it holds from professional services firm BDO, a key step in bolstering credibility in the use and exchange of this controversial digital money.

The review of Netagio’s Bitcoin storage environment was conducted under ISAE 3000, the International Standard on Assurance Engagements. This is the first review of this kind in the Bitcoin industry, Netagio said in a statement earlier this week.

The ISAE 3000 is an internationally recognised standard developed by the International Auditing and Assurance Standards Board (IAASB), to ensure the quality of assurance work, including report verification as well as assurance on corporate governance, internal compliance, and other areas central to corporate responsibility.

“This latest recognition reinforces our commitment to growing our secure, peer-to-peer exchange platform on which to trade Bitcoin, gold and sterling, and is a stepping stone towards maturity in the community of companies operating in the Bitcoin space. As the Bitcoin economy is gathering pace, with various jurisdictions considering regulatory frameworks, any steps we can take to achieve internationally recognized standards and assurances will give further credibility to Bitcoin’s place in financial and retail industries,” Simon Hamblin, Netagio chief executive, said in a statement. (This publication also recently interviewed Hamblin and will report on his comments soon.)

The fact that such a process has been undertaken highlights how firms such as Netagio, mindful that policymakers and commentators have been wary and even hostile to Bitcoin, are keen to bolster confidence in Bitcoin as much as possible. Large companies such as Expedia, the online booking portal for hotels and flights, and Dell, the computer firm, now accept payments in Bitcoins. UK finance minister George Osborne has stated that the UK must be open to financial innovation, including ideas such as digital currencies.

The creation and exchange of Bitcoin is based on an open-source cryptographic protocol and is not managed by any central authority. Each Bitcoin is subdivided down to eight decimal places, forming 100 million smaller units called satoshis. Bitcoin can be transferred through a computer or smartphone without an intermediate financial institution such as a bank. Using an analogy with the language of the gold market, Bitcoin processing is secured by servers called “Bitcoin miners”. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically. Each new ledger update creates some newly-minted Bitcoin; a crucial feature is that the number of new Bitcoin units or “Bitcoins” created in each update is halved every four years until the year 2140 when this number will decline to zero. After that time no more Bitcoins will be created - the total number of Bitcoins will have reached a maximum of 21 million Bitcoins.

Late last year the Malta-based hedge fund which was launched a year ago and that trades in the exotic-sounding electronic “money” of Bitcoin claims to have logged the highest returns of any hedge fund in history. Investing in this new area has generated a 4847 per cent return for the Bitcoin Fund, traded on the Exante platform, a Malta-registered business.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes