- Coinbase has announced that it now allows users to store their encrypted keys on cloud services
- The keys will not be available to the cloud service provider and can only be decrypted through the password by the user
One of the lessons that was learned from the QuadrigaCX fiasco is the importance of having backed up private keys. While investigations are still ongoing, it is evident at this point that $250 million worth of trouble could have been avoided if the private keys to the cold wallets had been backed up somewhere by the late CEO.
Needless to say, the industry has recognized, in recent times, that there is such a thing as being too secure. Coinbase is now combating this problem by announcing on February 12, 2019, that encrypted private keys can be backed up on Google Drive and iCloud.
“This new feature provides a safeguard for users, helping them avoid losing their funds if they lose their device or misplace their private keys,” the announcement says.
How it Works
This provides an extra layer of sectors for users that goes beyond the usual backing up of keys on mobile devices and 12-word recovery phrase. With this new option, users can store a copy of their keys in their cloud account, which means that only the login to their cloud account will be needed should they need to access this information.
What’s more, if their device is lost or they are signed out, a combination of their cloud account and their cloud password will help them access their funds.
When stored, the wallet password is secured through AES-256-GCM encryption and can only be decrypted by the Coinbase Wallet mobile app using the password. This means that neither Coinbase nor the cloud backup provider has access to the keys. For now, this service is only available for iCloud on iOS devices and Google Drive on Android devices, though support for other devices will be added in the future.
While this service is helpful, it is not mandatory and users are still able to back up their 12-word recovery key manually as well as use the cloud service, though Coinbase has recommended that they do both just to be safe.
Over the next few days, Coinbase users will receive automatic notifications to back up their wallets and they can also access backup options through their setting page. This feature also supports multiple account owners.