Coinbase wants you to keep your crypto holdings safe, but they also want you to have access to the funds, even if you lose your mobile device. According to its latest announcement, Coinbase users can now back up their Wallet’s private keys to their cloud storage accounts, including Google Drive or iCloud. The new initiative will provide a safeguard for users, where they end up losing their funds because they misplaced their private keys.
The post from the exchange reads:
The private keys generated and stored on your mobile device are the only way to access your funds on the blockchain. Owners of ‘user-controlled wallets’ like Coinbase Wallet sometimes lose their devices or fail to back up their 12-word recovery phrase in a safe place, thus losing their funds forever.
🔐☁️ Introducing Cloud Backup for your private keys on Coinbase Wallet!
Backup to your personal iCloud or Google Drive, and explore the open financial system with peace of mind. https://t.co/6uaHT8AZky
— Coinbase Wallet (@CoinbaseWallet) February 12, 2019
Cloud Backup Feature
Up until now, Coinbase users have had to store their private keys on their mobile device, which provided the only way to access their cryptocurrencies. This created a problem as losing Coinbase ‘user-controlled wallets’ or failing to back up the recovery phrase meant losing the funds forever.
With the new cloud backup feature, the exchange will make the encrypted version of the private keys available to all users allowing them to keep their funds safe irrespective of what happens to their device. Per the blog post, the private keys will be encrypted with “AES-256-GCM encryption” and stored on the cloud account, but it can only be accessed with the Coinbase Wallet mobile app, while the private keys can only be decrypted using the user’s chosen password.
If you lose your device or get signed out of the app, you can easily regain access to your funds with the combination of your personal cloud account (iCloud or Google Drive) and your password.
In cases, where the user loses access to their device, they can quickly recover their funds by using a combination of a password, which they would decide, and their iCloud or Google Drive accounts.
The Cloud feature is an addition to the current security features on Coinbase Wallet. The exchange’s users will still have the option to view and store their 12-word recovery phrase and back it up manually.
Backlash from Crypto Community
The announcement from Coinbase has generated a backlash from the crypto community who have always warned against the risks associated with storing sensitive data on the cloud, which has been riddled with poor data management and a plethora of SIM Swapping hacks, which has been on the increase of late.
I don't understand, how do you misunderstand your target audience so bad?
— The Crypto Dog📈 (@TheCryptoDog) February 12, 2019
CEO of U.S. exchange Kraken Jesse Powell was quick to criticize Coinbase’s decision to provide a cloud storing feature for user’s private keys, saying it would cause more problems than solve the existing ones.
“I am not a fan of training users on bad security. Cloud storage, while convenient, is constantly compromised, especially with all the SIM porting. 99% chance the people who would unwittingly use this do not have passwords strong enough to withstand professional cracking. #SFYL”
I am not a fan of training users on bad security. Cloud storage, while convenient, is constantly compromised, especially with all the SIM porting. 99% chance the people who would unwittingly use this do not have passwords strong enough to withstand professional cracking. #SFYL https://t.co/2cITbVQW0U
— Jesse Powell (@jespow) February 13, 2019
Earlier this month, a 20-year old SIM-Swap crypto thief was indicted from stealing cryptocurrencies from over 50 victims in the U.S.
According to the office of the Manhattan District Attorney’s Office, Dawson Bakies, a resident of Ohio, stole the identities and the crypto funds of his victims using a SIM-Swapping attack by fraudulently linking his victim’s cell phone numbers to multiple iPhones controlled by him.