Last updated on October 13th, 2017 at 10:02 am
Almost four months after announcing their Vault service, Coinbase is now giving out the control over private keys to its clients. According to the company, the response to the Vault product – which works like a savings account and is protected by additional transaction time and extra steps for verifying transactions – has been “outstanding” and nothing made more sense than allowing the customers to control their own private keys.
Besides the feedback provided by clients, Coinbase also considered the Mt. Gox debacle and “numerous other hacking incidents” that have been affecting the Bitcoin ecosystem pretty much since the creation of the digital coin. “At Coinbase, we made a decision early on that for Bitcoin to reach mainstream adoption, we would need to provide great security as a service to our customers (instead of asking them to understand technical concepts like encryption and private key storage). While we still feel this is a useful service to many consumers, we underestimated the demand for user controlled security in the Bitcoin ecosystem, and today we hope to make a big step toward supporting both systems”, the company said in a blog post.
The new feature is called Multisig Vault and allows the customer to have complete control of his or her private keys. Coinbase claims this is a guarantee that the clients’ cryptocurrency is completely protected against hacks, bankruptcy and any actions carried out by authorities.
“It also means that you as a customer have much greater responsibility in storing your backup key securely. If you lose this backup and forget your multisig password, Coinbase cannot help you recover your Bitcoin. For this reason, we only recommend this feature for advanced users”, the company – which is currently the platform storing the biggest amount of BTC in the world – added.
The Multisig Vault feature can be activated by any new client at the time of creating a vault. During the process, you will see the option ‘I will manage security myself’, which will ask the customer to be in charge of the private keys and remind you to store a backup in a safe place. Of course, the service is not exclusive to new customers and can be accessed by all users.
The feature distributes three keys, two of which are required to send Bitcoin. Coinbase will control one key, the customer will control other key and finally the third key is shared by the company and the user. However, this third key is encrypted with a password created by the client.
According to Coinbase, “you can also create group vaults that require 2 of 3 or 3 of 5 keys, with multiple key-holders. This is great for institutions or families (so family members can have access to funds if you pass away or become incapacitated)”.
The company wants to make the Multisig feature as simple as possible, so every Coinbase customer can make the most of it. The service is also completely free for every Coinbase user. Besides, the Bitcoiners using the platform’s latest services can also download a new free open source tool lunched by the company that allows the users to recover the BTC stored in the Multisig Vault in case Coinbase is unavailable or goes offline.
“We think this will greatly improve Bitcoin adoption amongst institutions and high net worth individuals looking to store larger amounts of Bitcoin securely”, the company believes. “A Coinbase managed wallet paired with a customer managed Multisig Vault offers the best of both worlds: a convenient way to spend Bitcoin day-to-day plus complete control of your Bitcoin savings”.
Images: Coinbase blog