Coinbase Files Patent for New Mechanism to Further Secure Bitcoin Payments
Coinbase has filed a patent for a new technique and mechanism for securing Bitcoin (BTC) payments.
San-Francisco based cryptocurrency exchange and wallet provider has filed a patent according to the U.S. Patent and Trademark Office (USPTO) August 14.
According to the patent information published, Coinbase is proposing a new mechanism for further securing Bitcoin (BTC) payments.
A patent to protect user Bitcoin addresses
The filing revealed that the existing systems do not properly address concerns that the private keys of users Bitcoin address can be stolen from their wallets during the payment process. This is possible especially when checking out on a merchant page.
The filing states:
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.
This has led Coinbase to apply for a patent dubbed key ceremony solution. This would involve encrypting private user passphrases into masterkey shares. The shares will then be brought together to form an operational masterkey.
The operational masterkey would be used to produce encrypted private key after a customer has checked out from the merchant page. A decrypted private key will be generated when a customer is signing transactions.
The system itself paves the way for users to pay directly with bitcoin through their wallet, without having to worry about the security of their private key.
It would also enable administrators to use freeze logic to suspend payment processes if they suspect any security breach.
The USPTO added that the filing proposes another method of API key generation. This will provide an added layer of security when the system is used across the web.
The patent detailed that the API would be stored in two parts, the first will be on the Coinbase web service and the other on the user/host server.
If the API key received from the web server matches the API key stored by the service, then a transaction can be confirmed.
Coinbase taking security very seriously
The cryptocurrency exchange has increased its effort towards security. Back in June, the exchange launched its Custody service which is intended to provide secure storage solutions for institutional investors.
Still, on security, MasterCard recently applied for a patent that would make use of blockchain to secure consumer payment credentials at the point of sale.