Perseus Telecom Launches Digital Currency Initiative

Terry Flanagan

Perseus Telecom has launched a Digital Currency Initiative (DCI), which is intended to provide industrial-strength security for Bitcoin exchanges as well as online gaming, e-commerce, and multimedia sites.

The initiative comes at a time when the Bitcoin community has been roiled by the shutdown of Mt. Gox, a Tokyo-based Bitcoin exchange, which reportedly has been the target of a bitcoin theft.

“The Mt. Gox episode is a learning opportunity,” said Carl Weir, head of business development, EMEA, for Perseus Telecom and its Marco Polo New World subsidiary. “The goal of DCI is to make sure that there is financial institution level security, KYC, and trading available and secure in multiple regions, hence Perseus’ role in this.”

Other Bitcoin exchanges say that the Mt. Gox incident is the natural result of a new industry undergoing a shakeout.

“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry,” Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle, said in a statement. “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we’re seeing today.”

Perseus Telecom is joining forces with bitcoin-trading platform Atlas ATS and Strevus Inc., which produces compliance-management tools for financial institutions and other firms, to build one or more U.S.-based digital-currency exchanges in the U.S. and elsewhere, according to The Wall Street Journal.

Atlas functions as an aggregator of Bitcoin liquidity, allowing exchanges and their clients, as well as clients of Atlas ATS, to obtain best prices for trading purposes.

Security should be a high priority for Bitcoin, according to Weir. “With DCI, we’re ensuring that anti-money laundering and know your customer rules are in place, and can be reported to regulators should they require it. In addition, bitcoins should be placed in cold storage, so that users whether financial institutions or individuals, don’t lose their bitcoin. If someone hacks the exchange site, there’s a layer within the trading environment which automatically rejects inconsistent code, which means it doesn’t get to the trading system.”

According to Atlas ATS, its multi-tiered software architecture allows it to control access and limit exposure at every level. In the unlikely scenario where an intruder gains access to the web tier (most vulnerable to attacks), they will still not have the ability to interfere with the core matching engine. The engine itself is also entirely disconnected from the computers storing customer bitcoins.

To minimize the possibility that an intruder could steal the entire reserve in a security breach, the operator of the website follows a best practice by keeping the majority of the reserve in cold storage, or in other words, not present on the web server or any other computer. The only amount kept on the server is the amount needed to cover anticipated withdrawals.

Methods of cold storage include keeping bitcoins on a USB drive or other data storage medium in a safe place (e.g. safety deposit box, safe), or on encrypted media where the encryption key is offline.

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