The major crypto exchange Coinbase filed for a new patent. On August 14th, the exchange filed for a patent that will enable online users to make Bitcoin payments more secure – directly from their Bitcoin wallets.
As the patent reads, the main issue right now is customers being required to compromise on the security of their own private keys, saying:
“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.”
Therefore, the new system is designed to enable users to pay directly in a “key ceremony” which will encrypt private user passphrases into a masterkey during checkout in order to reduce the risk of the keys being stolen. Here, the masterkey serves the function of encrypting the private keys and signing the transaction – after which it is deleted.
The system also has a “freeze logic” which is essentially a process where the administrators can freeze all processes – for example, if a user reports that they are being hacked or their identity is being assumed.
“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.”
Aside from this, the patent will also feature an API generation service that will enable the payment system to be used by other websites and services – implementing extra security with matching API keys stored.
Meanwhile, Coinbase has applied for many Bitcoin-related patents in the past. As the CEO of the company stated in a Medium blog post, “the goal is to keep the technology out of the hands of patent trolls who would patent services and hold them for ransom.”
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