Coinbase, a crypto exchange and wallet provider based in the U.S. has filed a patent on August 14 which proposes a mechanism that can better secure Bitcoin payments. This according to Coinbase filing published by the U.S. Patent and Trademark Office.
As contained on their filing, current systems do not sufficiently address concerns that the users’ private keys of Bitcoin addresses could be stolen from their wallets when they make a payment, specifically as they check out of a merchant’s page.
Therefore, the patent by Coinbase is so-called “Key Ceremony” solutions that would encrypt the passphrases of private users into “master key shares”. The shares are then joined into an “operational master key” and will be used to create a private key upon signing transactions. This new system would also enable administrators to employ a “freeze logic” that can suspend all payment activities when there is a security alert.
There is also a proposed method of API key generation to provide an extra blanket of security when using the system across the internet. As outlined on the patent, the API is stored in 2 parts. One part will be on Coinbase’s services while the other is on the host server. All transactions will only be validated if the API key coming from the web server matches the key stored by the server.
As Coinbase tries to find ways to reinforce security on crypto transactions, Mastercard has also filed a patent that would be using blockchain to protect customers’ financial credentials at points of sale.