Gem emphasizes security, simplicity with new Bitcoin API
On Tuesday, at the TechCrunch Disrupt in San Francisco, Bitcoin startup Gem announced the launch of a Bitcoin platform for developers. The Venice, California-based company’s “full-stack API (application programming interface) now provides developers with a complete solution that eliminates the pain of building Bitcoin security infrastructure into their apps,” according to a Gem news release. The platform is currently in private beta.
“We’re massively disrupting one of the world’s largest industries: banking,” said Gem founder and CEO Micah Winkelspecht as he introduced his company and service at the TechCrunch event’s Startup Battlefield.
In his presentation, Winkelspecht said the invention of Bitcoin allows for the same level of global access to individuals’ money and protection against theft or loss as a bank, but without the need for a bank.
“Bitcoin is one of the most amazing inventions of our lifetime, because for the very first time we can move money from point A to point B anywhere in the world instantly with no third-party in the middle, and developers around the world are flocking to Bitcoin technology and building apps that empower the individual to take control over their own money. They’re rebuilding the entire global economic system from the ground up.”
Winkelspecht noted in his presentation that there are more than 16,500 Bitcoin apps currently in development on GitHub, representing a 12-fold increase in just the past year.
He also acknowledged that Bitcoin security is quite difficult. Approximately 9 percent of all Bitcoin that has ever existed has been lost or stolen due to poor security, translating into a value of more than $600 million, said Winkelspecht.
With Gem, programmers do not need to be experts in cryptography, security, network security, and the underlining protocols of Bitcoin in order to develop a Bitcoin app. Developers “can build their entire stack on our platform with less than ten lines of code so they can focus on building product, not infrastructure,” said Winkelspecht in the press release. “We built our platform for developers who share our mission of empowering individuals to take control of their own assets, and we believe people shouldn’t have to sacrifice convenience for security.”
What’s cool about Bitcoin, Winkelspecht said during his presentation, is that it is programmable money. Developers can program additional rules to the digital currency itself that must be met before money can change hands.
Winkelspecht spoke about Gem’s multi-signature security platform. Every transaction requires valid signatures from at least two of three keys: Gem’s consigning key, a customer’s primary key, and an offline backup key held by the customer. Since Gem is in possession of only one key, it cannot move money without the customer. Unlike a bank, Gem never has possession of funds. Should Gem ever have a server breach, hackers would not be able to access Bitcoins without the keys given to developers, reports TechCrunch. At the same time, developers do not have to store users’ Bitcoin on their servers, says TechCrunch; they can simply give the keys to their users.
“Multisignature allows you to protect bitcoin without having to entrust your private keys to a third-party, thus eliminating single points of failure,” says Gem on its website. “It’s core to everything we do and everything we stand for as a company.” Key components of Gem’s API suite also include multi-factor device authentication, real-time bank-level fraud and identification monitoring, and redundant architecture with military-grade encryption.
When a Startup Battlefield panelist suggested in a post-presentation Q&A session that Gem is a third party, Winkelspecht said the company makes a differentiation because Gem is a participant in a transaction, but only an optional one. Users are able to move money without permission from the company by using the primary and offline key. Gem cannot initiate a transaction, but it can say no to one.
In his presentation, Winkelspecht demonstrated an example of what developers can build on the Gem platform. He said the company provides developers with every feature they can think of as a typical bank-level feature, such as multiple accounts, spending limits, and multi-factor authentication. The demonstration showed $25 being sent through a multi-signature Android app to one of the contacts found in the mobile phone’s e-mail address book. The process was sent through the Gem platform to run a verification of the transaction for authenticity. Winkelspecht noted that developers can also configure additional steps and other security features into transactions through Gem’s third-party integrations, such as Authy as shown in the demonstration. Once the “approve” button was hit, Gem as well as Authy approved the transaction. Winkelspecht’s presentation showed that it took just a few lines of code to accomplish that process.
Gem is still fine-tuning its pricing strategy, but Winkelspecht told TechCrunch that there will always be a free tier for small Bitcoin developers. For successful services, usage will determine pricing.
TechCrunch reports that Gem has raised $2 million in a seed-funding round led by First Round Capital, Tekton Ventures, REE Ventures, Birchmere Ventures, and others.
The publication reports that Gem shows there is a lot of excitement in the developer community around Bitcoin, but many have shied away from creating new Bitcoin services because of the cryptography aspect of Bitcoin. The startup tries to eliminate all these issues. “We want to make it so easy for developers that there is no reason not to start a project,” said Winkelspecht to TechCrunch. “They can focus on building product and not infrastructure.”
Image via press release