legal-achlegal-mastercardtier3-illustrationtier2-illustrationtier1-illustrationassets-reserve-xltransactions-xlicon-close-thinarrow-backandroidapplebullet-transparencytier-1tier-2tier-3transparency-obligations-xltransparency-reserve-xltransparency-volume-xltransparency-assetstransparency-averagetransparency-obligationstransparency-reservetransparency-volumelegal-worldstatus-downstatus-goodstatus-minorfeatures-computerfeatures-connectionfeatures-devicefeatures-scamsfeatures-getting-startedfeatures-hackfeatures-insurancefeatures-vacationsfeatures-ownershipfeatures-2fafeatures-memberfeatures-passwordfeatures-collaborativefeatures-commitedfeatures-compassionfeatures-consciousfeatures-creativefeatures-curiousfeatures-leadfeatures-tenaciousfeatures-donationsfeatures-bankfeatures-credit-cardfeatures-infofeatures-rewardfeatures-withdrawfeatures-communitytransparency-transactionslegal-chinalegal-europelegal-usafeatures-apifeatures-blogcheckedcarousel-arrow-nextcarousel-arrow-prevfeatures-accessfeatures-auditingfeatures-diligencefeatures-personnelfeatures-securityfeatures-freefeatures-globalfeatures-innovativefeatures-transparencypercent-0percent-5offices-bragaoffices-londonoffices-northern-californiaoffices-shanghaifeatures-assurancefeatures-convertfeatures-fundfeatures-holdfeatures-movefeatures-secureglobersstwitterfacebookemailinstagramlinkedinchevron-rightchevronclose-circleclosecurrency-btccurrency-cnycurrency-eurcurrency-gbpcurrency-jpycurrency-usdlocationmagnifyobligationssafeshare-circlesharetransactiontwitter-favoritetwitter-moretwitter-replytwitter-retweet

A couple of weeks ago, We took A Look at Bitreserve’s Transparency and today, I’d like to review our transparency product from a more technical point of view.

One of Bitreserve’s greatest achievements is the creation of the first-ever verifiable, secure, and real-time transparency system for a financial services company. This system consists of two key elements: the Reservechain™, a public record of all the transactions that occur across our network; and our Reserveledger™, a public record of all of the changes we make to the assets we hold in our reserve to balance the obligations we have to our members.

These resources are maintained in real-time, and made available through our API. Anyone is free to download these two resources. While these resources are still being finalized, let’s take a moment and walk through what they look like today via this brief video on the Transparency product and further documentation below:

The Reservechain

Our Reservechain is a completely anonymous record of all the transactions that have occurred on our network. It acts as a register for three different types of transactions: deposits, withdrawals and transfers. Given the similarities between them, let’s select the more complex of the three to show as an example. Here is a typical transfer, that incurs an exchange of value, on the Reservechain.

{
	id: "1571fbef-d34e-447c-9b6e-4ad775953082",
	params: {
		currency: "USD",
		rate: "392.16000",
		margin: "0.45",
		pair: "BTCUSD",
		txid: "1946783b396998f8f91c984431ecfecff6d0a72db68b32d0873c1024c7279254"
	},
	denomination: {
		amount: "1.3",
		currency: "BTC"
	},
	origin: {
		amount: "1.3001",
		base: "1.3",
		commission: "0.00",
		currency: "BTC",
		fee: "0.0001",
		rate: "0.00255",
		sources: [{
			id: "61cdccdf-cb6e-414e-aafc-7c42dc375cf6",
			amount: "0.73327414"
		}, {
			id: "34f87520-49a4-4f46-8ee0-ba0522c06aa1",
			amount: "0.56682586"
		}]
	},
	destination: {
		amount: "507.51",
		base: "509.81",
		commission: "2.30",
		currency: "USD",
		fee: "0.00",
		rate: "392.16000"
	},
	status: "completed",
	quotedAt: "2014-09-30T20:29:33.588Z",
	createdAt: "2014-09-30T20:29:36.458Z"
}

To summarize, this transaction details someone transferring (by way of moving money from one card to another, or by sending it to another person on the network) 1.3 bitcoin. The destination of the funds is denominated in US Dollars, so we automatically and instantly convert the bitcoin to US dollars, and publish the rate we guaranteed at the time and used for the conversion, along with any fees exacted by third parties and any commission we applied to shield us from the volatility risk we take on for our members.

Then to maintain the traceability of our system, we also publish the “sources” of the funds sent. These sources identify previous transactions from which the value that was sent/transferred was drawn from. In other words, any value that leaves a Bitreserve money card had to come from somewhere. We simply want to make it possible to make all value in our network completely traceable, both from any point moving forward in time, and any point moving backwards in time all the way back to the genesis of that value on the network.

You may also notice that no personally identifiable information is published through these resources, and that unlike the blockchain, our transaction log is completely anonymous. Unless of course you are viewing a transaction for which you were a participant. In that case, we reveal a little bit more about the origin and destination of the funds. For example, here is an example of a destination showing this additional information.

  "destination": {
  	"address": "1PtbHc2C3DHQmTRMxMd1DJgH7AKubjhbip",
  	"base": "1.00",
  	"commission": "0.00",
  	"fee": "0.00",
  	"amount": "1.00",
  	"CardId": "e3bc8674-f647-42f1-91b5-0395458ee81c",
  	"currency": "USD",
  	"description": "[email protected]",
  	"rate": "1.00",
  	"type": "email"
  },

We show the requestor the bitcoin address associated with the destination funds, the unique Bitreserve card ID, and in the “description” field we show how the destination was identified and addressed by the sender, which is typically a Bitreserve member name, an email address, or a bitcoin address.

Finally, when value enters or leaves our network via bitcoin, which is currently the only way value can leave or enter the system, we also reference the corresponding transaction ID on the blockchain so that value can be followed from the blockchain, into and through Bitreserve, and then back out to the blockchain.
The Reserveledger

The Reserveledger is critical because it makes visible to the world what is traditionally kept hidden away. But visibility and transparency are not quite the same thing. For example, being able to see a box versus seeing what is inside the box is very different.

True transparency comes through revealing what we do on the inside of our reserves to secure the obligations documented on the Reservechain. We do this through the Reserveledger.

Like a traditional accounting ledger, each entry documents either a change in our liabilities, or a change we have made to our assets, or both. For example, here is a typical entry in our Reserveledger:

{
	type: "asset",
	out: {
		amount: "1.3",
		currency: "BTC"
	},
	in : {
		amount: "507.51",
		currency: "USD"
	},
	createdAt: "2014-09-30T20:29:36.575Z"
}

To summarize, this shows a change we made to our assets in the form of exchanging 1.3 bitcoin for $507.51. You can’t get more straight-forward than that.
What triggers Bitreserve to adjust to its assets?

Bitreserve is not an exchange, otherwise every time a member moved bitcoin to their dollar card we would not honor that obligation, until a corresponding exchange of assets could be successfully completed. Because we function as a reserve, we can honor the transactions made by our members instantaneously, and settle the net difference of a large group of transactions. This brings great speed and economy to the platform, and is why we can offer such low rates. And as the aggregate value and liquidity of the reserve grows, our costs will go down–and so will our commissions.

A simple principle drives the economics of our platform, a principle we feel all financial institutions should abide by: transactions that cost us nothing, should cost our members nothing, and the costs we pass on to our members should be both rational and in proportion to the costs we bear as a company to facilitate the transaction. In other words, it should be fair.

Our goal in bringing transparency to the forefront is to allow the public to scrutinize for themselves what we consider fair, to hold us accountable, and over time build trust in us — trust rooted not in the belief that we are doing right by the assets they entrust to us, but in the knowledge and proof that we are doing right by them.

-Byrne