Private keys stored at Coinbase


#1

When you transfer a bitcoin from your Coinbase wallet to your Nano Ledger S, what happens to the private key stored on the Coinbase server?

My understanding is the private key is sent to the Nano Ledger S;

  1. If this is true, how is the private key sent securely?

  2. Could Coinbase keep a copy of my private key? If this is true, then my private key would still be vulnerable?

I understand how RSA private key encryption works and understand how bitcoin blocks work, but I’m not clear on how the private and public keys interact with the blockchain and the sending and receiving wallets.


#2

Nope, you never had a copy of your private key in coinbase to begin with. The address created by coinbase is held by coinbase and (probably) internally allocated to you.

The nano S has its own private key which never leaves the device and never will leave the device. That is the draw of hardware wallets :slight_smile:


#3

I have though a little bit of concern about how the private key is generated for the nano s ledger, and other hardware wallets. ¿How can we be sure that the manufacturer does not hold the private key of your account?


#4

The private key is generated by the device only after it is in your possession, and it never leaves the device, so it cannot be sent back to the manufacturer.


#5

Ok, so is it maybe generated based in the “circumstances” in which the device is powered on for the first time, like the unix time or something like that? (I know, I am going out from the scope of coinbase and exchange here, sorry)


#6

I don’t know exactly how it works but i suppose you choose ( or the wallet generates ) a frase of 12 words which in turn is used to build your private key, this is a common way of making backup of the private key easier, all you have to do is write down these words.


#7

[quote=“Rigario, post:2, topic:922”]
The nano S has its own private key whi
[/quote]To my knowledge if coinbase has your bitcoin
Its not your bitcoin you are suppose to store it offline
in a USB so that if coinbase ever gets hacked they
can’t tell you Oh Well sorry we lost your bitcoins:face_with_raised_eyebrow:
just my 2 cents


#8

Hey JDC,

Answering your questions directly…

  1. imagine you private key like being your “password” - for every Crypto Currency address you will have a private key generated. When you send your BTC from Coinbase to Ledger, you send only your currency (public key), not your private key.

What most people claim (and it’s true) is that Coinbase knows your private key (imagine that they take care of your password, so in case you lose it, they can recover for you). That means your BTC can be accessed by them, and once they have your private key, they can do whatever they wish with it… also…they know your passport info and your Proof of address. So, you will never be fully anonymous at coinbase.

  1. coinbase keeps a copy of your private key, YES. That’s a huge vulnerability you have by having an account with them.

Ledger Nano S, can probably help you to recover the private keys that you generated for your device. But it is your responsibility to keep them safe and stored in a secure place. That doesn’t mean they have access to your cryptocurrencies… YOU are the only one that can unlock the device with the keys that were generated in your gadget.

Remember, an exchange can be target of a hack attack, your Ledger Nano S is less likely to be directly attacked.

PS: some merchants prefer NOT to receive coins from a Coinbase addresss. :wink: