updated 08:36 am EDT, Fri May 16, 2014
Enhanced security, money laundering monitoring in free Circle Bitcoin storage
A start-up is attempting to make Bitcoin more accessible, by launching its own online bitcoin storage service. The Boston-based Circle allows users to purchase Bitcoin, store it in their account, and transfer to other Bitcoin accounts or users, with the service attempting to offer a more user-friendly approach when compared to other digital wallet services.
The simplified interface shows all transactions in dollars rather than in bitcoins, reports The Next Web, with $10 of the currency added to accounts once they have been linked to a debit card, credit card, or bank account. The service differentiates itself further from competitors, by aiming to process transactions within minutes, instead of the hours and days seen elsewhere, and offering it free without ongoing or transaction charges.
Circle claims a higher level of security for customer details and accounts. As a registered financial institution, Circle insures all accounts and keeps a reserve on all bitcoins,while the system itself relies on "military-grade hardware encryption," regular penetration testing, and multiple-signature transactions to protect itself from intrusions, such as that of Mt. Gox. The service also holds "the vast majority of customer balances" in several geographically-distributed facilities in cold storage, minimizing the amount of funds put at risk.
While the extra security and user-friendly system will be useful in attracting people interested in bitcoin, though it does have its drawbacks. The relatively anonymous nature of Bitcoin is replaced by a requirement for users to verify their identity to use accounts, with more verification required when linking a bank account or credit or debit card. If Circle detects suspicious activity, such as money laundering, it will report it to law enforcement agencies for further investigation, while users with a larger volume of transactions will also receive a greater level of examination.
"There have been a lot of barriers and friction and complexity to digital money formats over the past year or so. What we've tried to do with the service is remove a great deal of the complexity," said Circle co-founder Jeremy Allaire. "We want to make it as frictionless as possible, like in other industries that the Internet has changed for consumers. The baseline service of storing and sending your money should be free."
Circle is not the only company attempting to take on Bitcoin, with its $26 million in investment also not being the largest in the field. A collection of investors, including entrepreneur Richard Branson, recently put $30 million toward the Bitpay exchange.