BitGo recently made waves by offering faster transactions via their BitGo Instant service. The cost? 0.1 BTC for transfers over 1 BTC and reliance upon a third party. Actually, if we're taking attendance: we have the sender, the receiver, BitGo, and one from BitGo's list of secured key recovery services (KRS). Quite the dance card. Some of us may start to chafe from so much attention but it's all over soon as Instant lives up to it's name by guaranteeing access to your funds at a rate faster than mining and less vulnerable to whims of a volatile market. It's done through a 2-of-3 key model where the sender has one key, BitGo a second and the KRS a third backup key. It's like peer-to-peer went on vacation and invited peers in-laws. It's not quite oversight, maybe a hard sidelong glance, comforting as a set of eyes peering over an adjacent stall. 
 
Maybe that other set of eyes and their guaranteed transactions were inevitable. Bit, Lite and Doge have to grow up sometime and faith doesn't spend. These things grow by vice of venture capital. The early adopters have never really moved the market. The highest value a crypto-currency has ever seen came in the wake of FinCEN declaring it not illegal. Not illegal is where capitalism moonlights and the difference between value and profit marked. 

There is great utility in BitGo Instant but on it's face, this is just a credit service and a slice of fractional reserve banking within a currency meant to defy both; purity of concept sacrificed on the altar of expediency. The 2 of 3 key model is not centralization of a system, block or currency, but it does create a central point, a clearing house for individual transactions while highlighting a weak spot embedded in blockchain design. Any speed or latency issues should be repaired within a native block not swept under the rug for transaction costs. This is the area the crypto-currency was envisioned to fix, a flaw where this currency and it's culture need to be better than what's come before. 
 
There's also the ongoing  controversy about blockchain size caps and the 89th death of Bitcoin. One of the symptoms of that mortality? Longer times for transactions to process. While that makes instant access to funds a good deal for users, that's also a substantial risk multiplier for BitGo as they take on the burden of another's debt for an indeterminate amount of time, waiting to see what clears, fingers crossed as though hashes were Powerball numbers. And for instances when the numbers don't come up and transactions don't clear, BitGo will allow the wronged to file a claim. Why open up to a service that may end with you asking for your money? There's already good folding money inked in arcane rules for that. 

For BitGo that's the burden of being "full faith and credit". For users of crypto-currency it's the burden of backing young money that got famous as an investment product: another invite to the market not to provide solutions but to charge 0.1 for a band-aid.  
 
These are growing pains but one's needing less interference and better coding.
I'm all for capitalism and it's incidental innovation but once a third party is left holding the weight for transactional fidelity, then the currency used ceases to be crypto and resumes being fiat.
 

Published by Joe Murphy