Coinbase is moving to significantly expand the number of digital assets listed on its platform - a process that has led to a radical rethinking of how the startup safeguards billions of dollars worth of cryptocurrencies.
To this end, Coinbase moved retail traders' crypto assets - worth some $5 billion - into its upgraded storage model last week.
Phillip Martin, Coinbase's head of security, told CoinDesk that the migration process took roughly four months to plan.
It all began with a new key generation process in October, through which the Coinbase team goes to a secure location with new computers and prints out keys that are then split up using formats that include scannable QR codes.
The binders full of billions of dollars worth of keys are then divided among various secure locations, requiring multiple Coinbase employees to work together over the phone in order to unlock the cryptocurrency.
While many other bitcoin custodians prefer to rely on multi-signature wallets - rather than a single key divided into parts - Coinbase devised this strategy to accommodate assets that don't yet work with multisig wallets.
Coinbase may have applied this process to the highest volume of assets to date, but the institutional custodian BitGo has also used key sharding in custody solutions for diverse tokens.
BitGo CEO Mike Belshe told CoinDesk his startup won't support any asset that can't accommodate a multisig custody model.
"In the case of ethereum, which does not support on-chain multisig, we are able to support ethereum by using multisig through smart contracts," Belshe said, adding that BitGo simultaneously uses both key sharding and a multisig approach.
BitGo's VP of product marketing, Robin Verderosa, said BitGo and Coinbase follow similar reporting and compliance strategies, which could open the door for both companies to add support for new assets and policies in the following months.
Coinbase Just Moved $5 Billion in Crypto to Prepare for Token Expansion
gepubliceerd op Dec 19, 2018
by Coindesk | gepubliceerd op Coinage
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