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"But are you sure you want to trust a single person with your entire fortune? Worse, you're trusting multiple people where any single person can take your fortu
by tlrobinson 12y ago
"But are you sure you want to trust a single person with your entire fortune? Worse, you're trusting multiple people where any single person can take your fortune."
Coinbase is hopefully not entrusting individual employees with cold storage keys. Their security page suggests they're using Shamir's Secret Sharing or similar (https://www.coinbase.com/security https://www.coinbase.com/security), though multisig would be even better.
- jafaku 12y agoI can't believe they aren't using multi-signature internally. This is crazy.
- danielweber 12y agoCan they demonstrate the procedure works well enough that an insurance company would underwrite them for the full value of the cold wallet?
- tedunangst 12y agoWhat happens after an accident when they come up one secret short? The 98% are apparently not insured.
- tlrobinson 12y agoShamir's Secret Sharing and multisig Bitcoin transactions support arbitrary n-of-m pieces/keys, e.x. a 3-of-6 scheme would require 3 of the 6 pieces to reconstitute the key/sign a transaction, so any 3 pieces could be lost. 2-of-3 is common for end-user multisig. Generally you'd have 1 key physically backed up on paper in a secure place, 1 key on one of your devices (phone or computer), and 1 key either on another device (hardware wallet or phone) or controlled by a 3rd party that does risk analysis/fraud detection on your transactions.