Coinbase makes the biggest (and quietest) crypto transfer on record

In what is believed to be one of the largest crypto migrations on record, Coinbase has moved 5% of all BTC, 8% of all ETH, and 25% of all LTC in circulation after upgrading their cold storage infrastructure.

Philip Martin, vice president of security at Coinbase, said: “Last week, we successfully completed an on-blockchain migration of approximately $5 billion (as valued the week ending December 7th, 2018) of cryptocurrency from Generation Three to Generation Four of our cold storage infrastructure. To our knowledge, this is the largest movement of cryptocurrency (certainly in USD terms, potentially in absolute terms) ever undertaken.”

In yesterday’s blog post, Coinbase stated that they store 98% or more of customer assets in their cold storage systems.

A number of evolutions

Coinbase shared how their cold storage has gone through a number of evolutions throughout the years. Six years ago, the first version started out as keys in a safety deposit box.

As asset values increased, they then realised they had to diversify. “We needed to build a system that ensured broad consensus on movements from cold storage and could flexibly support many types of assets,” said Mr Martin.

“We start with a secure foundation with a highly controlled and audited key generation process, and continue with a globally distributed key storage and transaction approval system.”

The system Coinbase have in place “protects against key loss and key misuse, and supports world-class key governance and audit while being currency agnostic.”  This means they can store any cryptocurrency using the same system.

Risk assessments and monitoring plans

To make the move happen, the team began planning months before the actual move date, with involvement from 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,” said Mr Martin.

Coinbase concluded their blog post by saying that they are “continuing to push the pace of the industry in providing secure, auditable, asset-agnostic offline storage for cryptocurrency.”

If they truly do have aspirations to provide full auditability (for cold storage), I hope they can match the same level of transparency as other exchanges such as Bitfinex, who on October 7th published its cold storage wallet addresses for its major holdings in BTC, ETH, EOS, and ERC-20 tokens.