Coinbase Wins A New Patent To Secure Bitcoin Payments System
Cryptocurrency exchange Coinbase secured a patent for providing better security to the Bitcoin payments system. This patent was filed by Coinbase with the U.S. Patents and Trademark Office last year in December 2017.
The patent talks about providing an additional layer of security for user keys while letting them make Bitcoin payments directly from their personal digital wallets. The patent filing notes: “It may be a security concern for users that the private keys of their bitcoin addresses may be stolen from their wallets. 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 wallets.”
In order to reduce the risk of private key thefts, Coinbase’s new payment system would enable users to pay directly in a “key ceremony” by encrypting private user paraphrases into a masterkey during the checkout. The masterkey will look after encrypting private keys and transaction signing. Once it is used, the masterkey will be deleted.
Coinbase’s payment system also provides another feature called “freeze logic” which allows the system administrator to freeze all further process once any user reports that their identity has been impersonated or they are being hacked.
The patent notes: “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 checkout process can be carried out when the system is frozen and when the system is unfrozen. The payment process can only be carried out when the system is unfrozen.”
In order to allow other website and services to use this secure payment system, Coinbase will also be launching a API generation service. This API will consist of two parts. One of the two will be stored on Coinbase web service while the other present on the user/host server will facilitate for an extra security measure wherein the transactions are confirmed “only if the API key received from the web server matches the API key stored by the service.”
Coinbase has been filing for patents since last three years wherein the company has also been accused of creating a monopoly in the Bitcoin payments system. However, Coinbase CEO Brian Armstrong has clarified that the company aims at keeping the technology away from the reach of patent trolls.
In one of his blog posts, he wrote: “One of the best ways to defend against patent trolls is to build your own portfolio of patents, and this is exactly what we are doing, along with just about every other tech company out there. It is an unfortunate game we all must play, but we didn’t invent the rules.”