There are many aspects of a product, service or company on which trust can be built, but the starting point must be its foundation. Transparency is both a core value and one of our greatest innovations here at Bitreserve.
One of the things that excited me most about joining Bitreserve was the opportunity to build a financial services product from the ground up that I, myself, could trust and believe in. There are many aspects of a product, service or company on which trust can be built, but the starting point must be its foundation. Transparency is both a core value and one of our greatest innovations here at Bitreserve.
When you give someone your money with the intent of getting it back one day, there really is only one way to address the fear and anxiety that stems from them holding it for you: transparency. You want to know: What are they doing with my money? Is it safe? Have they given it to someone else? And when I want it back, will they have it to give to me?
Those are exactly the questions I want our members to ask of us, and for us to be able to answer anytime, and to answer immediately. Ultimately, I want a company that answers those questions not because we have to, but because we want to. In fact, it is our mission to do so.
So why are these concepts important?
Bitreserve is not the first transparent financial services company, but we are the first company to maintain transparency in real-time, 24 hours a day, 365.25 days a year. That is an important factor because it eliminates any temptation that might arise from the arbitrage and risks taken when no one is watching. It also makes it harder for financial institutions to cover their tracks by revising past mistakes, a.k.a. "cooking the books."
So, at Bitreserve we publish detailed records of all the transactions performed by our members, as well as by us in our maintenance of the reserve, in order to secure the entrusted value instantaneously as those transactions happen.
One of the first concerns that arises when you begin publishing peoples' financial transactions is privacy. Can people see who I am sending money to? Do they know how much money I have? Can they reconstruct my financial history?
When tackling this problem we tried to learn from the bitcoin community, which has grappled with the same concerns. The blockchain publishes peoples’ bitcoin addresses, and while it does not contain any personally identifiable information, the potential remains that if you could associate my identity with a bitcoin address, then you could trace all of my financial transactions. The Bitcoin community recognized this risk as well, and addressed it by encouraging the community to generate new addresses for every transaction.
We explored a similar solution, but in the end we decided that if privacy really was of paramount importance, then pseudo-anonymity was insufficient. Only a completely anonymous transaction register could protect our members' privacy 100%. So that is exactly what we did.
Bitreserve’s transparency system is completely anonymous. Only parties to a transaction can retrieve information beyond how much was transacted and when. This allows people to track value as it flows through the system, while never putting at risk any personal information. Because while a value can always be placed on the money people entrust to us, we believe our members' personal privacy is priceless.
Next, the whole point of publishing this information is to enable others to independently verify that the data we disclose and the statements we issue are factually accurate. Otherwise, we end up back where we started: asking people to trust that we are telling the truth, rather than demonstrating that we are doing so.
This is one of the principles that made Bitreserve possible, because the blockchain is an independent and absolute authority of value and ownership. So when value in the form of bitcoin enters or leaves our network, we can reference that movement of value via the definitive authority for that store of value.
Our system, however, enables people to hold value in many forms other than bitcoin. So a natural question to ask is, how can you verify our holdings for assets other than bitcoin?
Unfortunately, at present, the only answer to that question is that there is currently no way for people to independently verify these holdings due to the inherently opaque nature and culture of the traditional banking system. To remedy this, each quarter we work with an independent third party to audit our *entire* system. This audit serves as an additional guarantee for our claims. Furthermore, it is our mission as a company to bring a new level of transparency to banking, and in time we believe we can help establish a culture of transparency in our industry, or we will seek out or build technology to help achieve our ultimate goal of a financial institution whose assets and liabilities spread across multiple financial systems can be independently verified by all.
Finally, we wanted to build a system that reflected the underlying values of Bitreserve, publishing the details of our reserves and financial operations, and we wanted a system that would spur competition in the free market. That is why we have chosen to publish all the fees associated with transactions on our network, and why we publish the commissions we make on each transaction. We want to show the world that our costs are reasonable and fair. We have no intention to gouge anyone. We simply have the humble ambition to play a leading role in the adoption of digital currency worldwide, and usher in a new era of financial egalitarianism.
Louis Brandeis once said, "Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." For where there are no secrets, neither can there be distrust. And where there is no distrust, there can only be trust. And that is what this enterprise is all about.
Stay tuned for how we accomplish transparency in my next post.