Coinbase to create secure Bitcoin (BTC) payment system
San Francisco-based cryptocurrency exchange, Coinbase, won patent for secure Bitcoin (BTC) payment system. The recently published patent highlighted how the crypto exchange could create a payment portal allowing users to directly pay using Bitcoin from their digital wallet.
There has always been a security concern for users as someone may steal the private keys of their Bitcoin addresses from their wallets. “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,” the patent mentioned.
How does secure Bitcoin payment system work?
The system is called ‘key ceremony’ and the process is to create bundles for custodians encrypted with their passphrases. “Each bundle includes master key share. The master key shares are combined to store an operational master key. The operational master key is used for private key encryption during a checkout process,” the patent stated, “The operational private key is used for private key decryption for transaction signing in a payment process.”
There’s also a security measure that automatically stops all transactions if an administrator chooses to suspend the system which the patent mentioned it as ‘freeze logic’.
To explain the freeze logic further the patent stated, “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 system also includes, “TLS keys for authenticated requests to create an API key for a web application to communicate with a service and to unfreeze the system after it has been frozen by an administrator.” The payment process cannot be carried out in the frozen state, it is only possible when the system is unfrozen. And, the mentioned API key will allow different websites to launch their own version of the portal.
There are two parts of the API key: one would specifically be for the host server and the other would be stored on the Coinbase-developed system. For carrying out a transaction, two keys need to match, giving the users another level of security.
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