Coinbase holds 5% of all Bitcoin and 25% of all Litecoin
Few weeks ago “Whale Watcher” on Twitter noticed that unusually large amounts of Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC) were moved between crypto wallets. Some seemingly “crazy” theorists speculated that the transactions were due to Coinbase and its secret operational security practices. As Coinbase now confirmed, the suspicions were correct.
As Coinbase confirmed in a recent blog post, many of these “whale” transactions were indeed due to internal security measures. The company revealed in the post that it had recently moved 5% of all Bitcoin, 8% of all Ether and 25% of all Litecoin in circulation through a series of transactions – which Coinbase may have described as “the largest crypto migration in the history of the study”. And it looks like the dollar value of the stocks the company owns is worth a staggering $5 billion. The series of transactions means the largest sequence of transactions ever executed by a single entity, be it a crypto company, a whale, an investment group or Satoshi Nakamoto himself.
The blog post says that one of the main reasons for the transactions was the lengthy pre-planned security upgrade that prepared the stock market for its ongoing token expansion, which has seen the introduction of a number of new crypto currencies at Coinbase in recent months. Originally, Coinbase’s business model focused on a few crypto currencies – Bitcoin, Ethereum, Bitcoin Cash and Litecoin. However, in recent months the Exchange has added Ethereum Classic (ETC), Basic Attention Token (BAT) and Zcash (ZEC). Only yesterday the exchange added four more tokens – Golem, DAI, Maker and Zilliqa.
New Coinbase Storage Facility explained
As far as the underlying basics are concerned, the newly updated Coinbase storage system originally started in October, where the technical team carried out a key generation process. In short, the process consisted of generating a set of keys, and by supporting scan-friendly QR codes, these keys were then split.
The cryptographic process, also known as Shamir’s Secret Sharing, is a mechanism that serves to keep private information secure and protected. Once the keys have been split, they are distributed across multiple locations – multiple Coinbase employees must unlock them together. Although this process sounds very similar to a multisig wallet, the main difference is that it is compatible with crypto currencies that would otherwise not be suitable.
Coinbase added that this system reduces the risk of key loss and misuse while supporting “world-class key governance and audit while being currency independent”. Given the stock market’s desire to establish an excellent relationship with US regulators and attract institutional investment, Coinbase is likely to hope that its newly introduced storage system will convince users that it will be the platform of choice for large investors.
