Coinbase bags patent for developing secure payment system for Bitcoin [BTC]

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August 17, 2018 by
Coinbase bags patent for developing secure payment system for Bitcoin [BTC]

Coinbase, San Francisco based cryptocurrency exchange has acquired the patent for securing Bitcoin [BTC] payment system. The patent focused on the procedure of crypto exchange which would help in creating a payment portal and would facilitate its users to pay directly Bitcoin from their digital wallet.

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The users were in fear about the security as it was common that they might rob their private keys of the Bitcoin address from their wallet. The patent said

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.

Functioning of secure Bitcoin payment

The main work is in creating bundles for custodians which are encrypted with their passphrases. This system is known as ‘key ceremony’. The patent explained,

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 operational private key is used for private key decryption for transaction signing in a payment process.

It sometimes may stop the transaction if an administrator chooses to close the system. The patent has termed it as ‘freeze logic’.

The freeze logic further said,

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.

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It also added,

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 system can be done in unfrozen state. The payment process will not be performed in the frozen state. This key will give the advantages to the websites to come up with their own portal.

There are two parts of the API key: one would be there for the host server and the second one will be there in the Coinbase-developed system. During transaction unless the two keys match transactions will not take place. This provides security to the users.

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