Boston Startup Joins Atomic Swap Pursuit for Safer Crypto Trades

Boston Startup Joins Atomic Swap Pursuit for Safer Crypto Trades

The Boston Globe has reported on startup Arwen as one of a growing number of firms seeking to make cryptocurrency exchanges more secure by adding a layer of technology that would enable users to convert one currency to another with more safety.

Two Boston companies, Highland and Underscore, helped startup Arwen get started. The new firm was founded by a Boston University computer science professor and her doctoral student. Their plan is to create an extra layer of tech to protect transactions, based on an “atomic swap”.

This would allow users to swap cryptocurrency from different blockchains, without ever needing to hand over their tokens to an exchange as the mediator, as is the case with most traditional centralized exchanges. Effectively, the exchange matches orders but is non-custodial in the sense that users still retain control over their private keys and funds.

A group venture of capital firms and startups in Boston have identified cryptocurrencies as needing further safety standards to make them more safer. One of these firms, Castle Island Ventures, raised USD 30 million to work on the projects. Castle Island has already invested in six startup companies, other local firms like General Catalyst, First Star Ventures, Highland Capital Partners, and Underscore VC.

“The reason we launched the fund is we think a lot of these cryptocurrencies will be investible assets,” Castle Island Ventures founder Matthew Wash commented. “It’s bordering on a joke how immature the infrastructure is — and how dangerous it is… Every time I see one of these exchanges get hacked, or the founder take off with money in some kind of scam, it’s another reminder of how immature this industry is.”

““We’re in the early days,” says Arwen CEO Sharon Goldberg. “But let’s go back to 1999 and using credit cards on the Internet. Nobody wanted to put their credit card number into a website. But you do today, because you trust the encryption. You see that little lock in your browser.”

Goldberg points out the irony of using centralized exchanges to trade decentralized currency; adding that trusting software code is one thing, but trusting a centralized exchange is something quite different.

Arwen launched a sandbox environment for demonstrating the technology last month, and the company is now talking with prospective customers, mostly outside of the US, such as in Japan where exchanges are looking to improve current crypto technology.

 

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