For ‘Omnimetric’ Crypto Security, Anchorage Comes With $17M 

Square’s Encryption Experts Bring A New Start-Up

While the off-the-record demo was impressive, it is not allowed to tell exactly how Anchorage keeps rich institutions from being robbed of their cryptocurrency as judging by the $17 million Series A has the security start-up raised by Andreessen Horowitz joined by those like Khosla Ventures, #Angels, Max Levchin, Elad Gil, Mark McCombe of Blackrock and then AngelList’s Naval Ravikant. The crypto funds in fact like Andreessen’s a16z crypto, Paradigm, and Electric Capital have been already using it. 

Here we see them trusting in the guys who had engineered Square’s first encrypted card reader as well as Docker’s security protocols. The co-founder Diogo Monica believes that it is less about choosing the space and more about the space choosing them and in case you look at the backgrounds and at the problem it comes to be like the universe handed them on a silver platter the Venn diagram of the skill set. 

Hereafter as Anchorage comes out of stealth launching the cryptocurrency custody service to the public, anchorage still holds and therefore safeguards crypto assets for institutions similar to hedge funds and venture firms allowing transactions that are verified by an array of biometrics, behavioral analysis, and human reviewers because it doesn’t use the buried in the backyard cold storage, asset holders and earn rewards as well as advantages for participating in coin holder votes without the fear of getting their Bitcoin, Ethereum or other coins stolen.

As a result of these is that the crypto custody service could finally lure big-time commercial banks, endowments, pensions. Mutual funds and hedges into the blockchain world as it is whether seeking short term gains off of crypto volatility or they want to HODL long term participating in coin governance, Anchorage promises to protect them. Thus, they are evolving past pirate security. 

How Did Anchorage Come Into Being?

The story of Anchorage starts thereby eight years ago when Monica and the co-founder Nathan McCauley met after joining Square the same week. It happened while Monica was getting a Ph.D. in the distributed systems, and McCauley was designing anti-reverse engineering tech to keep US military data from being extracted from abandoned tanks or jets. Further on Monica tells and they were snapped up by Docker whereas four years of building systems which moved more than $ 80 billion per year in credit card transactions packaging themselves as a pre-product acquihire.

Growing from work and conference keynotes, their reputation saw cryptocurrency funds starting to reach out for help with custody of their private keys. In a display of jaw-dropping ignorance, one had lost a passphrase and the $ 1 million in the currency it was protecting. The pair got to work on Anchorage as the pair realised there were no true standards in crypto custody. 

Monica further explains that they look at the status quo as it is still in cold storage with the same technology used by pirates in the 1700s where they bury crypto in the treasure chest making a treasure map of where those gold coins are except that now it is with USB keys, security deposit boxes and checklists starting to call it Pirate Custody. 

Developing something better, anchorage saw a replacement for usernames and passwords or even phone numbers and two-factor authentication that could be misplaced or hijacked. 

The final activity was that it led them to Andreessen Horowitz the partner and a16z crypto leader Chris Dixon who is now on their board as they say they have been buying crypto-assets running back to Bitcoin for years now as there at a16z crypto, it comes hard to do it in a way that’s secure, regulatory compliant and letting you access it as they felt this pain point directly. 

Getting Experts Aboard Anchorage

At this point in the conversation, Monica and McCauley gave their off-the-record demo while there were no screenshots to share, as the enterprise security suite is being to have been built as the polish of the consumer app like Robinhood, where Anchorage works with clients to whitelist employees’ devices. Using multiple types of biometric signals and behavioural analytics about the person and device thereby trying to log in to verify their identity.

In this case, whenever they have access, Anchorage was built around the quorum-based approvals where withdrawals, other transactions and even changing employee permissions require approval from the multiple users inside the client company. Thereafter setting up the Anchorage, it also requires five of seven executives’ approval to pull out assets. 

Outlier detection algorithms and finally a human review has the transaction making sure it looks legit. Even if they are logged in the hacker or rogue employee can’t steal the funds because they need the consensus of approval. 

The institutional investors with this kind of assurance can confidently start to invest in crypto assets as the swell of capital is set to help replace the retreating consumer investors have fled the market leading to massive price drops. The blockchain industry can be set to moving with the liquidity provided by these asset managers as McCauley says that the institutional investing has had centuries to build up the set of market infrastructure with the custody as something that for the other asset classes was solved hundreds of years ago as it was now catching up. Monica adds that they were creating a bigger market in and of itself. 

As anchorage steadfastly handles custody, the co-founders admit the risk worries them as it lies in the smart contracts governing the cryptocurrencies themselves and McCauley further explains that they need to be extremely wide in the level of support as it is extremely deep because each blockchain has details of implementation, as the inherently difficult problem. In this case, it surely doesn’t matter as the coins are safe in Anchorage’s custody even if a janky smart contract botches their transfer. 

There are plenty of start-ups that are vying to offer the crypto custody as ranging from Bitgo and Ledger to well-known names like Coinbase and Gemini, Anchorage as of now offers a rare combination of institutional-since-day-one security rigor with the ability thereby to participate in votes and governance of the crypto assets which is impossible in case they are in cold storage. Anchorage has further hinted that it might serve the clients recommendations for how to vote to maximise the yield and preserve the sanctity of the coin. 

Finally, Concluding The Discussion

Having the crypto investment legend Chris Dixon on their board to guide them Dixon explains that in case you see it in the same way that institutional investors wanting to buy stock in Facebook and Google and Netflix wanting to buy the equivalent in the world 10 years from now doing that safely as anchorage will be that layer for them.

In this case, why do the Anchorage founders care so much about it as McCauley concludes that as they look at what is potentially possible with crypto, there comes a fundamentally more accessible economy viewing themselves as a key component of bringing that future-forward?