10 Updates

Could 'Multisig' Help Bring Consumer Protection To Bitcoin Transactions?

Mar 28 2014, 10:52pm CDT | by

The bitcoin world, which has never been dull, is getting even more interesting with the growth of multi-signature approaches—called “multisig”—for authorizing transactions. This has the potential to...

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17 weeks ago

Could 'Multisig' Help Bring Consumer Protection To Bitcoin Transactions?

Mar 28 2014, 10:52pm CDT | by

The bitcoin world, which has never been dull, is getting even more interesting with the growth of multi-signature approaches—called “multisig”—for authorizing transactions. This has the potential to help address one of the most significant challenges that bitcoin has raised: How can bitcoin users avoid losing their money if they authorize payment to a seller who fails to deliver, or if an exchange holding their private information gets penetrated by hackers? These concerns drew heightened attention after Tokyo-based bitcoin exchange Mt. Gox ceased operations and filed for bankruptcy in February, leaving the equivalent of hundreds of millions of dollars of customer deposits in limbo, and likely lost.

Bitcoin, as many people now know, is a digital currency and an associated protocol that makes it possible to send payments to anywhere in the world almost instantly and with very little overhead. Bitcoin transactions are secured by the collective processing power of a network of widely dispersed computers, making it possible to establish trust even when no single party in the network is trusted. It’s an ingenious approach to decentralizing trust that can be used not only for payments, but also for digital rights management , transferring ownership of digital goods, and many other applications.

Bitcoin transactions are accomplished with the aid of public key cryptography. Traditionally, if a bitcoin user we’ll call Alice wants to send bitcoins to a user we’ll call Bob, she uses a private key she controls to sign a message containing, among other things, the number of bitcoins she wants to transfer and a public key associated with Bob. Within about ten minutes this transaction will be verified by the bitcoin network, and it becomes, for all practical purposes, irreversible.

But what happens if Alice thought she was buying a surfboard from Bob, and Bob, after receiving payment, decides to hang onto both the surfboard and Alice’s money? Since Alice knows only Bob’s public key but not his actual name, there’s no practical way for her to file a complaint. And, unlike if she had paid with a credit card, there’s no way for her to reverse the payment.

Multisig approaches have the potential to address this by making transactions contingent on the collective agreement of multiple parties. In the example above, the system could be modified so that Alice and Bob each provide their public keys to an escrow service, which then uses its own key to generate a new bitcoin address to which Alice can send payment for the surfboard. Moving the payment from that address requires the authorization of any two of Alice, Bob, and the escrow service. This protects Bob, because he can ship the surfboard knowing that Alice can’t unilaterally take back the money she has placed in escrow. Alice is protected because Bob can’t unilaterally extract the money from escrow. Once Alice receives the surfboard, she and Bob can jointly authorize the transfer of the money out of escrow to Bob. Or, if she claims that she hasn’t received the surfboard, or that it is defective, the escrow service can arbitrate the dispute.

Multisig can also be used to help combat unlawful payments (by making it possible for a third party to confirm that payees aren’t barred from receiving funds) and to make exchanges and wallet services safer. In a “traditional” bitcoin system in which payments can be authorized using only a single key, if that key is somehow obtained by hackers, the legitimate owner is out of luck. But in a multisig system, an exchange or wallet service can collect enough customer information to facilitate transactions, but not enough to enable a hacker to run off with a customer’s bitcoins.

Unsurprisingly, multisig has led to some interesting startup possibilities. One of the most intriguing new companies in this space is Cryptocorp , founded in January 2014 by Miron Cuperman and Ryan Singer. Cryptocorp is aiming to use multisig to enable bitcoin transactions to benefit from the same types of pre-clearance authorizations done today in association with credit card payments. Credit card companies will decline a transaction if the credit card has been reported stolen, if the seller’s merchant account has been suspended due to fraud or excessive chargebacks, or if the amount to be charged exceeds preset limits. Cryptocorp believes it will be able to offer analogous services—and more sophisticated variants of those services—to bitcoin users.

Vitalik Buterin has a well-written, more detailed explanation of multisig transactions here . For those with an interest in the finer nuances of multisig, Buterin’s article is well worth reading. And for all of us, multisig is an important example of how innovation in decentralized trust systems is just beginning.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dew ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammud ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the souther ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compen ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Baza ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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