San Francisco-based cryptocurrency exchange Coinbase has reportedly moved a whopping $5 billion worth of retail customer holdings as part of a storage upgrade in anticipation of a significant expansion of the number of digital assets listed on its platform.
Earlier this month, Coinbase moved 5% of all BTC, 8% of all ETH, and 25% of all LTC in circulation to our next-gen secure cold storage. Here’s how we did it. https://t.co/8TJ6S97BnW
— Coinbase (@coinbase) December 19, 2018
According to a recent blog post, Coinbase currently holds at least 5% of all Bitcoin (BTC), 8% of all Ethereum (ETH) and 25% of all the Litecoin (LTC) in circulation. The $5 billion transfer took roughly four months to plan, said Phillip Martin, Coinbase’s head of security, as the company is implementing a fundamentally new architecture.
“Regulators and auditors were involved at every stage… one of the biggest things we were worried about is that we don’t move the market with this event, which is why we went to such lengths to coordinate with regulators and manage media speculation around the movements,” Martin told CoinDesk.
The migration process involved a number of steps, starting with new key generation where the Coinbase team traveled to a secure location and used new computers to print out keys in a number of different formats, including QR codes.
From there, Coinbase applied a technique called Shamir’s Secret Sharing where the keys are split up and combined with other parts to allow for secret sharing. These are then put into binders, now worth billions of dollars, which are further divided among various secure locations. These binders require multiple Coinbase employees to work together via phone to unlock and access the stored cryptocurrency.
While this method sounds extensive and can be replaced in part by multi-signature wallets, Coinbase notes that not all of its assets currently support multi-sig, forcing them to leverage the aforementioned strategy.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.