The US-based cryptocurrency exchange has shared the details of the internal migration of assets to its new cold storage system.
One of the leading cryptocurrency exchanges in the world, Coinbase, recently moved 5% of all BTC, 8% of all ETH and 25% of all LTC in circulation and many other assets in what the firm believes is the biggest digital asset transfer on record.
The firm shared the details of the internally conducted migration in an official blog earlier on Wednesday. The movement of the cryptocurrencies was an internal exercise for enhanced security of assets in its management.
The Firm’s Focus on Security
According to the blog, Coinbase places a high priority on the security of customers crypto assets. The various practices that the firm follows include consumer security protections, internal development practices, and third-party audits.
The vice president of security at Coinbase shared that firm stores over 98% of customer assets in the firm’s cold storage system.
The Coinbase executive wrote:
Last week we successfully completed an on-blockchain migration of approximately $5 Billion (as valued the week ending Dec. 7, 2018) of cryptocurrency from Generation Three to Generation Four of our cold storage infrastructure. To our knowledge, this is the largest movement of cryptocurrency (certainly in USD terms, potentially in absolute terms) ever undertaken.
Coinbase Cold Storage Design
Cold storages for digital assets are offline and disconnected from the internet or any other automated system. Currently, there is no global standard for cold storage.
The blog stated:
Coinbase’s standard for truly cold storage is that multiple geographically separated humans in the real world should be forced to perform physical actions to enable a transaction after reviewing transaction details. If that isn’t true, we don’t think it’s actually cold storage.
Coinbase explains how the cold storage system at the firm has evolved over the last six years, starting with the “keys in a deposit box” to the currently deployed Coinbase custody.
The system as detailed by the blog starts with “a secure foundation with a highly controlled and audited key generation process and continue with a globally distributed key storage and transaction approval system.”
The blog stated:
This system protects against key loss, key misuse (including insider threat and application level attacks) and supports world class key governance and audit while being currency agnostic. That means we can store any cryptocurrency using the same system, without making compromises in the level of security provided to any single cryptocurrency.
The actual execution of the migration which was meticulously planned over months took four days to execute.
As the cryptocurrency market has grown over the last couple of years, so have incidents of security breaches and hacks. More and more exchanges around the world are turning to cold storage solutions to keep customer assets safe. The blog by Coinbase may prove helpful to other crypto firms in designing their cold storage systems.
Do you agree that crypto exchanges should keep most of their customer assets in cold storage? Let us know in the comments below.
Images courtesy of ShutterStock