Bitcoin Startups that Centralize Bitcoin Storage Systems

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Bitcoin Startups that Centralize Bitcoin Storage Systems
Bitcoin Startups that Centralize Bitcoin Storage Systems

Bitcoin Startups that Centralize Bitcoin Storage Systems

To avoid the loss of Bitcoin in situations like the collapse of Mt. Gox, a major Bitcoin exchange, Peter Smith of Blockchain.info says that the users should avoid going out and buying Bitcoin on an exchange with centralized trust. He suggests that users should immediately transfer these Bitcoin to a service where they can manage public and private keys.

Peter Smith was a part of the discussion with Susan Athey of Stanford University wherein the duo took the stage at Disrupt NY to update everyone on the state of the digital currency. The two speakers were addressing the issue of Mt. Gox collapse and its impact on the value of the digital currency thereafter.

In fact, Bitcoin lost half of its value and some skeptics even question the long term survivalist of the digital currency. The conversation was part of Disrupt NY wherein panels and one-on-one chats featuring TechCrunch writers and editors, special guest speakers, leading venture capitalists and fascinating entrepreneurs address the most important topics.

When asked about the potential that Bitcoin has, the two experts were of the opinion that the digital currency as a whole is here to stay; however, they suggested that Mt.Gox may have shown us that there is a wrong way of handling Bitcoin.

According to Mr. Smith what Mt. Gox does bring up is the historical difference on philosophy about how startups use the Bitcoin protocol. He added that some Bitcoin startups centralize their Bitcoin and when some user sends them out, they are actually moving that into a master account. One such example was from Mt. Gox.

He asks traders whether they would I trust anyone with such an arrangement. Thus, he suggests that if someone goes out and buys Bitcoin on an exchange with centralized trust, he should immediately transfer these Bitcoin to a service where he can manage public and private keys.

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Public and Private Keys Should be Accessible for Users

According to Mr. Smith, some companies like Blockchain provide software to more effectively and more securely manage their digital currency. He says that these Bitcoin users manage their own public and private keys and thus ensure that none can break into a wallet if does have the private key.

Of course, Peter Smith who is associated with Blockchain which gives a lot of attention to the fact that customers have access to public and private key makes sure that there is no loss to investors.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com