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Coinbase Files Patent to Boost Security For Cryptocurrency Wallets

Reading Time: 2 minutes by on August 21, 2018 Business, Finance, News, wallet
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Coinbase has filed a patent concerning a new technology designed to increase the security of cryptocurrency wallets. Coinbase’s patent was filed on August 14, 2018, and has been submitted to the United States Patent and Trademark Office (USPTO). The goal is to ensure that users can make direct payments from their Bitcoin wallet without compromising on their security.

Freeze Logic to Prevent Private Key Exposure

According to Coinbase’s patent, it noted that private keys may be a security concern for users since “the private keys of their Bitcoin addresses may be stolen from their wallets.” The idea is that “existing systems do not provide a solution for maintaining security over private keys while still allowing the users to check out on a merchant page and making payments using their wallet.”

Instead, Coinbase offers an alternative approach which will allow users to pay directly via a “key ceremony.” The key ceremony encrypts the private user’s keys into a master key during the checkout process. The master key is, however, also required to decrypt the private key when it comes to transaction signing. The master key is then deleted upon its use. Having a master key would, therefore, reduce the risk of private keys being stolen in the process and boost overall security.

ZDNet commented that an interesting part of the patent is its introduction of the concept of freeze logic. “At any point in time after the master key is loaded the system can be frozen. The system can be unfrozen after it has been frozen using keys from the key ceremony.”

The patent noted that the checkout process could even continue when the system is frozen and unfrozen; however, the payment process can only occur if the system is no longer frozen.

Furthermore, the patent also detailed an API generation service which allows the payment system to be used by other services and websites. There are two components when it comes to the API generation service. One part will be stored on the Coinbase web service and the other on the user/host server. The idea of the API generation service is to secure Bitcoin payments on a variety of websites and ensure that it can become a widely adopted cryptocurrency for the e-commerce sector.

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