On December 19th Coinbase announced a successful transfer of approximately $5 billion in cryptocurrency which it claimed was one of the largest cryptocurrency transfers in history. The transfer included 5% of all BTC, 8% of all ETH and 25% of all LTC in circulation.
According to Coinbase, the transfer was an on-blockchain migration of cryptocurrency from Generation Three to Generation Four of their cold-storage infrastructure, thereby emphasising the company’s commitment to security. Coinbase’s website blog states: “At Coinbase, our commitment to security is expressed in a number of ways, from consumer security protections to internal development practices to third-party audits and tests. Our most critical responsibility is the security of the assets that our customers entrust to us. The gold standard of cryptocurrency asset security is offline, or “cold,” asset storage. Coinbase stores 98% or more of our customer assets in our cold storage system.”
Coinbase’s cold storage technology has now been upgraded, moving to “fourth generation” systems. This uses what the company terms a “highly controlled” system for storing secret keys and approving transactions, preventing the loss of keys, misuse by “bad players” which includes “insider threats” and providing regular audits: “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 preparation for the transfer was planned over many months, with Coinbase undertaking substantial risk assessments and preparing for all possible scenarios: “We began planning months before the actual move date and involved almost every team at Coinbase in the process. We conducted risk assessments, honed monitoring plans and conducted test migrations until we were positive that the live migration would go off without a hitch.” Potential risks included market concerns raising fears of price manipulation and other such unwanted publicity, and the need to give potential hackers insufficient time to move to breach security during the course of the transfer. The threat posed by these two risks was mitigated by Coinbase issuing a short blog post just prior to the transfer, allaying market fears with only minimum notice of the event.
The transfer took four days to complete and was executed without issue. Coinbase asserts that they are “ continuing to push the pace of the industry in providing secure, auditable, asset-agnostic offline storage for cryptocurrency…this new cold storage system is a core part of our strategy to expand our asset offerings while never compromising on the level of security we provide our customers.”
Coinbase has now made available its cryptocurrency exchange platform in Gibraltar alongside a further five regions in Europe.