London-based secure Bitcoin vault Elliptic is slowly adding new pieces to its startup jigsaw, last week appointing former Bitcoin Foundation director Kevin Beardsley as the firm’s new head of business development.
It’s another fillip for a firm that in January gained ISAE 3402 accreditation from auditors KPMG, a critical piece if financial architecture for a company that wants to make Bitcoins a respectable form of investment secured using its Vault platform.
So a year into operation, where is this unusual business today? According to co-founder and CTO Adam Joyce the firm is finding customers from London’s financial sector among investment funds and trading houses which increasingly view Bitcoins as a respectable, investment-grade asset.
Naturally, they need somewhere secure to keep these as well as automation to minimise the sort of friction that surrounds so many other financial assets. This turns out not to be easy to build.
Elliptic has had to engineer a tie up to have the Bitcoins stored with it insured in a policy underwritten by an unamed Fortune 100 firm (Lloyd's of London is no longer involved). Still, Bitcoins have an odd reputation, Bitcoin startups more so, which is why Joyce is keen to emphasise the financial benefits of being able to offer insurance and the sort of financial respectability of being based in London and accredited by KPMG.
“Many of our customers require a custodian that complies with certain standards. Our accreditation by KPMG allows certain customers to use us,” says Joyce. “We always ensure we act in a compliant way.”
One of the most extraordinary aspects of this business is that it is reinventing the world of physical security and paper online virtual currencies might be assume to have abolished. No matter how much clever software the small but expanding team builds, the core of the company is a special room full of computers and other storage hardware that are not only not connected to the Internet but have never been connected to the Internet.
These are the among loneliest computers in the world, so isolated Joyce says that the keys made by them often emerge on old-world paper.
“The keys come into existence in that offline world. We go down to this location, create crypto signatures and bring them out in paper or an offline storage device,” says Joyce.
It’s an unexpected mixture of the old and new worlds. “There are many parallels between gold and bitcoins. Gold is a scare resource and bitcoins are a digitally scare asset.”
Elliptic is planning to launch a product that will allow people to trade bitcoins on an exchange without the risks that might be there today, partnering with exchanges.
“We are exploring these ideas in advance of market adoption so there is a challenge,” he concedes.
Despite its reputation for being a currency from the wrong side of the tracks, Bitcoins are getting there. In December, Microsoft announced it would start accepting payments in the currency, a symbolic move that underlines momentum.
Correction: The original version of this story stated that Elliptic's Bitcoin insurance policy was underwritten by Lloyds of London. This is no longer the case.