Blog

Apr 17, 2014

Coinfloor’s First Provable Solvency Report

Bitcoin exchanges are an important part of the Bitcoin ecosystem. The bankruptcy of MtGox showed the world that although Bitcoin is decentralised and secure, bitcoin firms are third parties and warrant scrutiny before trust is granted to them. With the failures of exchanges and the bankruptcy of MtGox, the standards of accountability and security have increased. Coinfloor has made the security of client funds a top priority, holding all client funds in multi-signature cold storage wallets. Coinfloor is dedicated to accountability and is committing to publish a Provable Solvency Report every month, showing the total amount of client funds Coinfloor has on deposit and proving ownership of those funds on the block chain.

 

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Today we release our Provable Solvency Report, an industry first. It containins an obfuscated list of client accounts and their associated balances on deposit. The accounts are identified only by hashes that incorporate each account’s secret authentication cookie (which can be found on the logged-in dashboard) and the unique timestamp at which the report was generated, thereby protecting the privacy of our customers. We also post a SHA-256 hash of the report and include that hash in a Bitcoin transaction sending all our client funds from one P2SH address we control to another address we control.
 

We present you Coinfloor’s first Provable Solvency Report:

SHA-256 Hash: 156f86147d4c0e9dbfb37bed290980807939c50df3a3b6e11e160ced4ce54c47

Transaction ID: 573d096e74324683d9dc7e47af2a9df07b09bbd46c93f77bb4a4825ac685f595

Provable Solvency Report #1 (April 16, 2014):

*Edited 17/07/14: After a period of 3 months the report has been removed.

Instructions for Validating Solvency Report

  1. Compute the SHA-1 digest of a message consisting of your API authentication cookie appended to the timestamp shown at the top of the report. Example:
    echo -n '13976431159BTa7M0Z/Mrk6tFMJwEkTV3BQek=' | sha1sum
  2. Find the resulting digest in the solvency report. Your balance is shown on that line.

The invention of the block chain as a global decentralised ledger enables markets to produce new standards of accountability and the safeguarding of client funds. In a self-regulated environment such as Bitcoin, firms must compete for customers’ trust. We hope that these measures of public accountability and safeguarding become standard throughout the industry.


We believe that this approach is the best way to achieve maximum accountability while retaining privacy for our clients. We welcome feedback from the community and hope that other exchanges are also able to safeguard client funds and provide proof of solvency as well.