New Coinbase Patent will Improve Security of BitcoinTransactions

The United States Patent and Trademark Office (USPTO) on Tuesday published blockchain-related patent assigned to Coinbase cryptocurrency exchange. Through its patent filing, the U.S.-based cryptocurrency operator proffers a method of improving the security of purchases made via bitcoin transactions from users’ wallets.

In the preamble, Coinbase acknowledged security concerns users have when using their digital wallet—concerns that their private keys may be stolen from their wallets.

The document read:

“Existing systems do not provide a solution for maintaining security over private keys while still allowing the users to checkout on a merchant page and making payments using their wallets.”

Coinbase proposes a secure payment portal for users to pay for goods and services directly from their digital wallet. It described a system comprising a so-called, “key ceremony” that creates key bundles of “master key shares” is used in combination with “operational keys” to generate an encrypted private key which is eventually used to checkout and sign in for payment transactions.

In addition to the temporary passphrases and encryption-decryption system, the patent uses a “freeze logic” to stop transactions if an administrator chooses to suspend the system.

The patent explains:

“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.”

The system also makes use of API keys to protect users when making transactions across the web. This API key is applied in two parts: one on the host server and another on Coinbase’ system. To be effective and allow a transaction, the keys at both ends must match.

Payment service provider, Mastercard recently won a patent aimed at securing bitcoin transactions. MasterCard’ssystem incorporates cryptocurrency and fiat storages thereby improving crypto transactions through established fiat protocols. It its patent, Professional services firm, Accenture sought to use a hardware device to improve the security of blockchain transactions.

Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.

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