Coinbase Uses Electromagnetic Signal Blocking Tents In Their Cold Storage
Most people in the crypto ecosystem know that cold storage is the most secure way for individual investors to store digital assets. Wired journalist Tim Simonite visited Coinbase and calls their cold storage facilities. He describes the facility as “an arcane ritual intended to bewitch Wall Street and help it fall in love with cryptocurrency.”
Let us take a look at the peculiarities of the vault that blew the journalist’s mind.
“I am transfixed by the plummeting signal strength on my phone as employees of cryptocurrency exchange. Coinbase close the flap of the stuffy silver tent I’m standing inside,” he writes. Adding, “The fabric walls enclose a cubic space about 8 feet across and contain mesh that functions as a Faraday cage, which blocks electromagnetic radiation. By the time the tent is sealed, my connection to the outside world has drained away to nothing. Now the ceremony can begin.”
A Faraday tent is identified after Michael Faraday originally uncovered the underlying laws behind electromagnetic induction, diamagnetism, and electrolysis. The aptly titled Faraday tent is a shielded tent designed to block electromagnetic signals from escaping and being intercepted by cybercriminals. It’s in this tent where the company securely prints the private keys for its investors.
Coinbase picks a safe position to construct the tent at random and operates a shielded power supply to reduce power fluctuations that could provide insight into what’s transpiring inside the tent to onlookers. Apart from that, there’s only a folding table, a lamp, a printer, and two laptops. One laptop runs a Linux-based operating system from a USB drive. The other is a MacBook that Coinbase uses to print private keys transferred over from the laptop running Linux because, according to Zak Blacher of Coinbase’s security team, it’s “just way easier printing from a Mac.”
Coinbase’s head of security Philip Martin says this process “takes most of the day.” It begins with a coin toss to decide which laptops are being used in the ceremony and ends with Coinbase storing the freshly printed private keys in what Wired calls a “reimagining of the bank vault.” The laptops used during the process are destroyed after everything is completed to prevent data leaks.
Martin and his team came up with their key-generation and storage scheme because, while cryptocurrency transactions use cryptography to prevent the same money from being spent twice, funds are still easily defrauded or stolen. The rise of bitcoin, since its creation in 2008, can be tracked by the parade of heists in which exchanges have been hacked. Computer security company Carbon Black estimates that more than $1 billion of cryptocurrency was stolen in just the first half of 2018.