Coinbase introduces Vault

http://blog.coinbase.com/post/90552757447/the-future-of-bitcoin-storage-wallets-vaults

by mihar • 12 years ago

183 62 12 years ago

blog.coinbase.com

PabloOsinaga• 12 years ago

I wonder how well Xapo is doing - because this seems like a copycat.

buttsex• 12 years ago

Same with BitGo.

kanzure• 12 years ago

I wonder how well Xapo is doing - because this seems like a copycat.

And there's going to be even more copycats than there already are. Making APIs on top of Bitcoin's API is going to get way, way more competitive because that's basically the first idea that every player entering the market has. It's extremely low capital to spin up a new API, so everyone and their mom's dog have been doing it. Transaction fees will be driven down by the copycats, and many of them will probably cut their transaction fees to zero for a long time (ahem, Coinbase).

white_eskimo2• 12 years ago

Why is multi-sig in quotes? Is Coinbase providing its users with a '3' address that is on-block chain, or does this "multi-sig" approach still reside entirely off-block chain.

Edit: I presume that Coinbase still holds on to all of the private keys for Vault accounts. Can someone verify otherwise?

michaelt• 12 years ago

Some people use quotes to imply "this is not my term" - this is sometimes used for jargon and words you won't find in a dictionary.

For example: The economist said I should consider my "BATNA" or GPS receivers measure "pseudoranges".

Just as using jargon can indicate you are part of an group, putting quote marks around jargon indicates you stand apart from that group.

enra• 12 years ago

Actual launch page and a video about how it works https://coinbase.com/vault

spacefight2• 12 years ago

In other news - "use vault, the regular wallet is insecure".

kolev5• 12 years ago

Yes, there shouldn't be degrees in security - a system is either secure or not.

josephlord• 12 years ago

Well then nothing is secure.

At least as far as a whole system goes including the soft squishy components designing, developing and operating it.

Even for cryptography the only absolute proven secure method is the one time pad which has very real practical flaws and risks if you try to operate it in the real world.

wmf2• 12 years ago

The threat model here is people leaking their own Coinbase passwords (via phishing, compromised PC, etc.), so the 48-hour delay and out-of-band verification ought to actually help.

mhluongo3• 12 years ago

Of course that's not true. Convenience / security trade-offs are common, and lie on a spectrum.

sejje4• 12 years ago

I'm assuming the vault doesn't improve security at all in the event that coinbase gets hacked and loses all of their btc?

tlrobinson• 12 years ago

Multisig might.

"To complete the Coinbase Vault offering, we will be adding multi-signature (“multi-Sig”) technology in the coming weeks to enable customers to manage their own vault security."

It's not clear exactly how that will work, but if it's, say, 2-of-3 and Coinbase only holds one of the keys then it would.

ukd1• 12 years ago

Multisig would be good, especially if it's actually a address keypair, as it would allow you to verify the balance held exists.

aeharding• 12 years ago

They're all offline, stored in real safety deposit boxes and bank vaults...

danielweber• 12 years ago

The keys are stored offline, but the BTC are always online. They are relatively safe against someone compromising your computers remotely. Against physical intrusions or insider attacks, not as much.

linkeex• 12 years ago

Probably not as much as they'd like it to.

Brian Armstrong, CEO of Coinbase once said in an interview (http://techcrunch.com/video/coinbase-founder-brian-armstrong...) that they are dividing their bitcoins in hot and cold wallets.

A hot wallet only contains about 5% of the bitcoins the company has. Meanwhile, the other 95% of bitcoins they're holding are stored savely in a key-split cold wallet.

Now, the problem is: if some user wants a large amount of his bitcoins out of coinbase, the guys owing their part of the split private key need to take action to transfer that amount of bitcoins from the cold to the hot wallet, assuming the amount is > 5%.

So what I think "Vault" does is give them a better architecture for planing and organizing their hotwallet-coldwallet-process.

white_eskimo2• 12 years ago

What makes you so sure that Coinbase even has all of our bitcoin in the first place?

sejje4• 12 years ago

I said all of their bitcoin. Coinbase certainly doesn't have all of my bitcoin.

I didn't intend to make a conspiracy theory out of my question.

baddox• 12 years ago

You can make sure that Coinbase has none of your bitcoins if you transfer them to your own wallet as soon as possible.

pbreit• 12 years ago

That's a terrible assumption.

ghshephard• 12 years ago

If they truly have cold storage of their btc - yes, this system does improve security, as their cold-storage bitcoins aren't subject to electronic hacking, just physical intrusion. And, the use of encryption and HSMs can mitigate against even a physical intrusion as well.

Sometime in the next couple years, someone is going to come up with a relatively fool proof vault storage for bitcoins, we just haven't see it yet. (And Coinbase isn't sharing enough details yet for us to know whether they've put one together)

xfour• 12 years ago

Is anyone else picturing the digital equivalent of this Al Pacino snl video? http://kristenwiigdaily.tumblr.com/post/27009841161/mygiftis...

kolev5• 12 years ago

How about fixing the web app before adding more features? Their Ajax page loading hangs most of the time. Going straight to the URL works immediately, but it's not always possible.

flexo0r2• 12 years ago

I thought I was the only one experiencing this. My feeling is that the sometimes extreme slowness of their website is not unintentional, kind of like their arbitrary canceling or delaying of transactions and blaming it on false positives in their "high risk detection algorithm".

kolev5• 12 years ago

I honestly doubt that. For example, I tried to create a new wallet yesterday. The line indicator bar took its time (over 5 minutes) and never completed. Refreshed the page, it was there. Renamed another wallet - same thing. I'm not sure how this UI that never confirms that some operation completed can be intentional! This always happens to me - at least on Firefox as haven't used Chrome recently. Switching from Buy to Sell, for example, is the same. Any navigation, which is using history.pushState(), obviously, takes minutes, and almost never completes. I just know the routes by heart and key them in (no kidding), or click to get the route updated and then refresh. Honestly, I can't wait for Circle to grant me access... or Buttercoin or whatever alternative as we need redundancy. expresscoin seems nice, but its fees are much higher.

mhluongo3• 12 years ago

This. And the API.

coinbase-craig• 12 years ago

Hi, Craig here from Coinbase. What changes would you like to see to the API?

state• 12 years ago

Is this where Tim is going to store his coins?

wmf2• 12 years ago

Obviously not if he bought them to provide liquidity for competitor Vaurum.

peteretep• 12 years ago

If it's not insured, what's the point?

josu• 12 years ago

From a customer's perspective a false sense of security. From Coinbase's point of view, it decreases their need for liquidity and their chances of a run.

mhluongo3• 12 years ago

If this is their jumping-off point for multi-sig I'd be interested.

woah• 12 years ago

What's up with the cold storage? That is absolutely no security, it is purely an operational detail on Coinbase's side. You are still trusting them with all your coins. Once they get multi-sig, that might actually be something interesting. For all we know, the "Vault" might just be a new menu item and some css.

arasmussen6• 12 years ago

I disagree with the direction Coinbase is going. Of all the things they could have built next, this is what they chose? Why not develop a button that says "Pay with Bitcoin by Coinbase" that allows one-click payments on third party websites/mobile apps? Or why not compete with Bitstamp and btc-e on the exchange front? There's definitely tons of room for competition there.

Consider a traditional USD/EUR bank account. If your bank offers you a "vault" option to store your large balance to offer better reassurance that it won't get stolen from your "regular account"/wallet, aren't you going to have some serious concerns about security of the regular account? Instead of offering a "more secure account" why don't think just work on the fact that people feel that their regular accounts are insecure. This seems like a bandaid on the problem rather than the proper fix.

It's also overcomplicated. Now I have two account types and have to worry myself over what the differences are for accessing my money in each and how to use each. They're increasing the amount of friction it takes to get started rather than basing their model off a bank's model of "your account is as secure as it needs to be, just use one".

veemjeem• 12 years ago

I don't really agree here. A bank is safe because your money is FDIC backed even if a robber raided their coffers, BTC doesn't have that level of security yet and given the number of thefts in the last few years, I think security is something that is on everyone's minds when they choose a bank to hold their coins.

arasmussen6• 12 years ago

This is a good point. I guess what I should say is that I'm looking forward to the day when Bitcoin banks are FDIC backed and we can move on from being paranoid about security.

jerf• 12 years ago

I am at a loss as to why you think this is the thing they built.

flexo0r2• 12 years ago

I don't see how this is complicated or confusing and I completely disagree with you. I think this is absolutely the right direction to be going if coinbase (and bitcoin) want to become mainstream. An exchange is mainly for traders and most people like myself don't want to look at candlestick charts to know when to purchase or make a bid without any certainty of obtaining coins or worse compete with bots. On the other hand many people I know have kept away from bitcoin because of how seemingly complicated and confusing it is to supposedly keep secure -don't keep coins on exchange, use paper wallet, encrypt backups of private keys. This is definitely a step in the right direction towards attracting a more mainstream audience. As for a 'Pay with Bitcoin' button, are you kidding, how do you think overstock, newegg etc accept bitcoin payments - this is one of the first things they did.

arasmussen6• 12 years ago

Yeah I think we just disagree.

- An exchange is definitely a huge opportunity and a valid direction regardless of whether it'd be useful to you. and one that would make wall street more interested in Bitcoin which would push it mainstream.

- I feel this "vault" stuff won't do much to convince people it's secure. who knows whether the security is even different? just more terminology to learn = greater friction. keep it simple.

- does their button even support mobile?

mangoman• 12 years ago

They have the pay with bitcoin button

https://coinbase.com/docs/merchant_tools/payment_buttons

I've used it on overstock.com and it's pretty incredible. I think it's the least amount of information I've ever had to enter to buy something online. All I entered was the shipping address and my email address.

superuser2• 12 years ago

That's essentially the same as having a Paypal account, though.

arasmussen6• 12 years ago

Oh really, didn't realize that. I guess I should have done more research before posting! That's awesome!

evbots3• 12 years ago

Bank's don't have that model. Any sane person would have a separate savings account that doesn't really get used. The checking account is meant for variable balances, because your account number is more than likely floating around via checks/online ACH transfers which results in the potential for a security breach.

arasmussen6• 12 years ago

So then why don't they just call it a savings account and a checking account? Wallet is an implementation detail at this point that the average user shouldn't have to learn when there's already a word in their vocabulary.

vijayboyapati• 12 years ago

Multi-sig is a very powerful innovation for corporate use of bitcoin. Not because you can have arbitrarily many M of N signing a transaction, but that you can outsource complex policy in a trusted way. E.g., create policy that lower level employees can control a small percentage of a company's holdings, while higher level employees can control a higher percent. It allows you to implement flexibility that exists in the credit system, without giving up the trust/control that comes from the blockchain system.

Coinbase introduces Vault

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