Since its launch in 2012, Coinkite has become one of the most popular providers of Bitcoin wallet services in the industry. But after a long period of silence on its blog and on social media, the company has announced in a new blog post that it’s moving on.
Coinkite’s CEO Rodolfo Novak tells Coindesk that the company has been under constant DDoS (Dedicated Denial of Service) attacks from the very start, and admits that the firm’s “meager resources” were being depleted rapidly by the costs of DDoS protection services from providers like Psychz and Cloudflare, as well as legal bills connected with the operation of Coinkite – factors he described as the “amount of bulls—t” the firm faced in running the service.”
One of the most surprising claims by Novak is that “state-sponsored actors” have been “creating (the) headaches” largely responsible for his company’s difficulties. However, he did not explicitly blame governments for the DDoS attacks that have repeatedly plagued Coinkite (and are relatively common in the Bitcoin industry); he was apparently referring to attempts to regulate Bitcoin providers, which he sees as continuing attempts to breach the privacy of those using Bitcoin wallets.
Novak did admit that real or perceived obstacles created by governments, and service disruptions due to the obviously ineffective DDoS protection utilized by Coinkite weren’t the only financial drains on the company. It seems that the company’s business model may also have been at fault, since he referred to the costs of providing support to “all the free users” as another factor in his decision to move away from offering Bitcoin wallets as a SaaS (software as a service) firm.
Coinkite had reported that during the three summer months of 2015 it had processed $250 million dollars’ worth of Bitcoin transactions, making it one of the largest wallet operations in the world. Its service was considered one of the easiest to use and also interfaced with merchant payment systems and POS terminals, so the decision to move on from its secure online wallet system was a surprise to many in the industry.
The Future of Coinkite
Coinkite isn’t giving up on Bitcoin, but is simply moving on to hardware rather than software solutions. Among the projects that Novak says are on the horizon include a stand-alone physical terminal and wallet system for merchants complete with a QR scanner and printer, new Bitcoin authentication and security products, USB sticks containing Bitcoin wallets, hardened professional servers for hosting other providers’ hot wallets – and most interesting of all, a physical Bitcoin to be manufactured in a project called Opendime.
The Coinkite wallet service will be shut down by the end of April, but its application process and Tor access will be discontinued by the middle of the month. Customers are being reminded throughout April to remove all funds from their accounts; after that, any balances remaining for pre-paid plans will be automatically refunded. Coinkite is recommending that its customers use alternatives like Electrum and Ledger moving forward.
During its four-year existence, Coinkite has processed more than one billion dollars worth of Bitcoin transactions.