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One of the bigger sayings on the bitcoin social forums is: “if you don’t have the private keys, they’re not your bitcoins.”
That’s referring to third-party services that allow consumers to store their bitcoins online like Circle. But San Francisco-based Coinbase is looking to change things up with the introduction of a multisignature vault that allows users to manage their own private keys.
[blockquote style=”2″]Our new Multisig Vault gives the customer complete control of their own private keys. Coinbase has no ability to move funds (which means you are safe from Coinbase being hacked, going bankrupt, or anyone seizing your bitcoin). It also means that you as a customer have much greater responsibility in storing your backup key securely. If you lose this backup and forget your multisig password, Coinbase cannot help you recover your bitcoin. For this reason, we only recommend this feature for advanced users.[/blockquote]
When creating a vault, users will be asked whether they want Coinbase to manage their security, or whether they want to manage their own security. The users will then be asked to store a backup key securely.
In short, there will be three keys. Two of the keys will be required to spend the bitcoin.
One key is managed by the user, another is managed by Coinbase, and a third is managed by both Coinbase and the user — though it is protected by a passphrase created by you.
The feature is free and available immediately to all users. Coinbase has even offered a free open-source tool that allows users to recover stored bitcoins if Coinbase goes down.
You can read more about this here.
