A newly established Coinbase patent is looking for a method of making bitcoin transactions safer for customers.
The U.S. based cryptocurrency exchange noted in a filing published August 14, that it could launch a payment platform that would enable users to make payment by bitcoin directly from their digital wallet.
It may be a security concern for users that the private keys of their bitcoin addresses may be stolen from their wallets
the patent said.
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.
As the system was described, it sets up a “key ceremony” that manufactures key shares that are joined together into an operational master key which is coded with the users’ passphrases which can be designed in such a way that it will publicly be available and deleted after use.
The operational master key is being employed for personal key encryption during checkout, and also for purchases signing after a payment is made.
The term “freeze logic” in the filing is also used in the process, this a security measure that automatically stops transactions if an administrator decided to postpone the use of the system.
The patent clarifies:
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 patent further stated that the system also possesses an API key, indicating that various websites would have the ability to establish their own version of the portal.
Two parts would be possessed by the API key: one would be allocated to the host server, whereas the other would be saved on the system established by Coinbase. In order for a transaction to take place, the two keys would have to match hence, being an additional form of security for customers.