Popular cryptocurrency exchange Coinbase launches a new feature for its stand-alone digital asset wallet, offering users the ability to back up their private keys using either Google Drive or iCloud.
The official statement made on February 12th, 2019 by Coinbase read, “allowing users to upload their keys to a cloud provides a safeguard against lost keys, which will help them avoid losing funds should the keys be misplaced.”
The idea behind cloud storage is to give users of the Coinbase Wallet a safety net in the event that they lose access to the device upon which the software is installed or happen to misplace their private keys somehow. However, some in the cryptocurrency community have highlighted that the saving of private keys on cloud storage services could expose users’ funds to additional threats.
The announcement noted, “The private keys generated and stored on your mobile device are the only way to access your funds on the blockchain. Owners of ‘user-controlled wallets’ like Coinbase Wallet sometimes lose their devices or fail to backup their 12-word recovery phrase in a safe place, thus losing their funds forever.”
San Francisco-based Coinbase is one of the few exchanges to launch its own wallet software, helping promote the kind of monetary sovereignty Trace Mayer’s “Proof-of-Keys” event championed on the 10th anniversary of the Bitcoin network going live. Users of the Coinbase Wallet are the sole holders of their private keys. As such, they potentially enjoy a much higher degree of security than those choosing to leave money on centralised exchanges, which are prone to hacks and other security breaches.
Coinbase noted that neither they nor the cloud services will have access to user funds, as recovery phrase key is unlocked by a password known only to the user. The backup is purportedly encrypted with AES-256-GCM encryption, which is only accessible through the Wallet mobile app.
In addition to Google Drive and iCloud, Coinbase will expand support to other clouds in the future. The feature is an opt-in service that does not replace or supersede the original recovery option.
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