Meet Gem, a new bitcoin startup with a different take and a focus on developer tools. Gem provides a highly available, scalable API for bitcoin developers to abstract the bitcoin storing layer. In other words, Gem will store, encrypt and backup your users’ bitcoins so you don’t have to take care of this cumbersome aspect. The startup is launching today in private beta at TechCrunch Disrupt and is competing in the Battlefield competition.
“Our platform allows you to create wallets based on multisignature technology and other technologies,” co-founder and CEO Micah Winkelspecht told me in a phone interview before Disrupt. “It’s more secure than holding your own keys because we provide an extra layer of security.”
Gem’s storing approach is very reminiscent of Blockchain‘s model, but Gem is all about providing a better developer API than Blockchain. Some services like Coinbase, Circle and others centralize everything and rely on passwords and two-factor authentication. When you send out bitcoins to these services, your bitcoins are actually stored in a master account. These startups know how many bitcoins you’re supposed to have. As Mt.Gox has shown us, these services can be compromised and startups are fighting back with insurances.
Other bitcoin startups like Gem and Blockchain develop services that don’t actually store bitcoins — they are more like storage services. Gem keeps encrypted files on their servers. The only way to decrypt these files and access your bitcoins is with one or multiple private keys.
Even if Gem has a server breach, hackers won’t be able to access bitcoins without the keys that are handed out to developers. At the same time, developers don’t have to store your bitcoins on their servers; they can just give the keys to their users.
“The industry right now is really focused on payment, but we’re really about empowering the next wave of developers,” Winkelspecht said. “Right now, if you want to build a bitcoin app, you have to be an expert in cryptography and security. We give you a very consumable platform and a client library.”
After entering the Battlefield competition, Gem faced a very interesting challenge — it’s hard to demo an API on stage. For the last few weeks, the company thought about a way to make it more visual and interesting for the audience. That’s why the team just presented a multisignature Android app that uses the Gem API on stage. It was a good dogfooding experience. “In just a few weeks, we were able to develop one of the best Android wallets on the market,” Winkelspecht told me.
The company is still tweaking its pricing strategy, but Winkelspecht told me that there will always be a free tier for small bitcoin developers. For more successful services, the pricing will be based on usage.
Gem will also provide add-ons to handle other important features for bitcoin developers. “We’re very early in that stage, but we’re talking with third-party developers to become the all-in-one platform to develop bitcoin apps,” Winkelspecht said. For example, you will be able to easily implement two-factor authentification, account spending limits, anti-money laundering requirements and more.
Based in Los Angeles, the team of nine has raised $2 million in a seed funding round led by First Round Capital, Tekton Ventures, RRE Ventures, Birchmere Ventures and others.
Gem is evidence that there is a lot of excitement in the developer community around bitcoin. But many have shied away from developing new bitcoin services due to the cryptography aspect of bitcoin. Gem tries to remove all these pain points. “We want to make it so easy for developers that there is no reason not to start a project,” Winkelspecht said. “They can focus on building product and not infrastructure.”