Huobi Bets Big on Multisig With Quickwallet Acquisition

Jon Southurst (@southtopia) | Published on August 8, 2014 at 14:00 BST

Bitcoin-litecoin exchange Huobi has acquired multi-signature wallet Quickwallet and China’s leading BTC/LTC block explorer Qukuai.com.

The company said the acquisition puts it on track to not only become the number one secure bitcoin storage option for the Chinese market, but to gain a significant share of the international market as well.

Quickwallet CEO Zhang Jian will become Huobi’s vice president of technology and will have overall responsibility for the company’s new business development.

Significance of the deal

Huobi’s Robert Kuhne told CoinDesk the acquisitions served a dual purpose:

“This is just the start of Huobi implementing a comprehensive strategy, not only to expand its own business, but to promote the development of the whole industry in China.”

The exact price Huobi paid remains undisclosed, but the company invoked the name of BitGo as an example of its potential reach. BitGo, the “world’s first multi-signature wallet” made headlines in June with some high-profile hires and investment totalling $12m.

Huobi’s rapid expansion plans

Quickwallet was launched on 15th July, but such is the intensity of competition and speed of growth in China that Huobi CEO Leon Li decided to bring it immediately into Huobi’s family of services.

As well as Huobi’s primary exchange business, that family also includes Hong Kong-based margin trading platform BitVC and its interest-bearing wallet ‘Yubibao’, which opened to the public just this week after a six-week beta phase.

Huobi will keep the Quickwallet brand separate to its other offerings, but will adjust it to integrate more closely with the other services. Block explorer Qukuai (Mandarin for ‘block’) was created by the same team as Quickwallet, and was included in the deal.

As soon as the acquisition was finalized, Huobi’s team set about translating the new services into English for users outside China.

Kuhne said:

“The strategy is to have a family of products/services with unique brand identities (Huobi, BitVC, Quickwallet, and more soon to come), but that are mutually-reinforcing and reach the same high standard of convenience, security and aesthetic quality that users want.”

Already users can make instant deposits from Quickwallet to Huobi exchange accounts, and clicking on a transaction link takes them automatically to Qukuai to see the block chain.

The system supports both bitcoin and litecoin, even allowing users to receive both kinds of coin to the same address.

The benefits of a multi-signature wallet

All multi-signature (or ‘multisig’) wallet addresses start with the number three and neither the user nor wallet company may access or spend the funds without the other’s approval/private key.

The concept of multisig wallets has been around for a while, but very few companies have actually implemented it in consumer products.

Quickwallet employs a ‘two-of-two’ multisig system, meaning one private key is retained by the user locally, while the other is stored on Quickwallet’s servers. This means a user cannot double-spend and, as a result, they can get instant confirmation of transfers to other Quickwallet users and deposits to Huobi exchange accounts.

This also makes Huobi the first bitcoin exchange to offer instantaneous deposits from an on-blockchain wallet.

Even if a user’s private key is hacked and/or stolen, the thief cannot gain control of the funds. Also, this means no one at Huobi or BitVC has the power to take the coins.

Kuhne added:

“When the user makes a transaction, his private key is encrypted in the browser just like Blockchain.info, so Quickwallet never sees it.”

Some multisig implementations have a third key, which is also retained by the user or a third-party for extra security. In this instance, two of the three keys are required to spend or transfer funds.

Image via Marcio Eugenio / Shutterstock

via Huobi Bets Big on Multisig With Quickwallet Acquisition.

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