In a huge step on behalf of Coinbase, the company has recently obtained a patent for a Bitcoin payment portal. The patent was originally filed on December 11, 2017, and it was officially granted on August 14, 2018, with patent #10,050,779. This marks a new level for the company and all of the protections it offers for their platform while working on expansion in a market that is growing at a very quick pace.
The PayPal of Bitcoin
While rumors went around for many years stating that PayPal was going to be adding Bitcoin, the simple truth is that it hasn’t. As such, new companies had to come to the market to help allow Websites to accept payments securely, with Coinbase being one of them. They’ve grown quickly and have solidified themselves as a trusted site within the U.S. and abroad, and they have pushed many things to help the Bitcoin network thrive (such as batch transactions, though they were a bit later than a lot of others on that front). As with any company, though, immense R&D costs need to be protected, and a patent is the way to go about it. With this new patent, they are essentially granted exclusive rights to a specific way of handling payments.
How it Works
Essentially what will happen is that all of the key generation happens on Coinbase’s side via API calls (much like how PayPal works). There are calls for a lot of different things, ultimately ensuring that Coinbase can take care of the security side of things, rather than each site having to handle that on their own. It is stated that existing systems do not provide a solution for securing private keys while still allowing the users to check out on a merchant page and make payments using their wallets. This is handled through what they call the “key ceremony,” which involves combining keys into a master key that is encrypted with users’ passphrases and is then made publicly available and can be deleted after use. The master key is then used for private key encryption during checkout, along with signing transactions after payments are made.
Freeze logic is also included, which can stop transactions from occurring if an admin elects to suspend the payment platform. “At any point in time after the master key is loaded, the system can be frozen. The system can be unfrozen after it has been frozen using keys from the key ceremony. The checkout process can be carried out when the system is frozen and when the system is unfrozen. The payment process can only be carried out when the system is unfrozen.”
The Future of Coinbase
The fact that this patent was filed and accepted can mean a huge push forward for Coinbase. Going from opening a custodial service to having a solid way to run a PayPal-like system for payments is massive, and it’s going to keep them solidified as a pillar of the community for the time being.