Bitcoin price is holding the key support near the $3,580 zone against the US Dollar.Yesterday’s contracting triangle is in place with resistance near $3,610 on the hourly chart of the BTC/USD pair (data feed from Kraken).The price is likely preparing for the next bullish break above $3,610, $3,620 and $3,650.Bitcoin price is setting up for the next crucial break against the US Dollar. BTC could gain bullish momentum if it clears the $3,620 and $3,650 resistance levels in the near term.Bitcoin Price AnalysisRecently, we saw an intermediate high at $3,658 in bitcoin price against the US Dollar. Later, the BTC/USD pair corrected lower and traded below the $3,600 and $3,580 support levels. However, the $3,540 and $3,550 support levels acted as a strong barrier for sellers. A low was formed at $3,539 and later the price bounced back above $3,580. The price broke the $3,600 resistance and the 100 hourly simple moving average. Besides, there was a break above the 50% Fib retracement level of the last drop from the $3,658 high to $3,539 low.However, the price faced a strong resistance near the $3,610-3,620 zone. More importantly, yesterday’s contracting triangle is in place with resistance near $3,610 on the hourly chart of the BTC/USD pair. The pair seems to be struggling near the 61.8% Fib retracement level of the last drop from the $3,658 high to $3,539 low. Therefore, a successful break above $3,610 and follow through above $3,620 could set the pace for more gains. The main resistance is at $3,650, above which the price might revisit $3,720. On the other hand, a downside break below $3,580 could encourage sellers to push the price further lower.Looking at the chart, bitcoin price seems to be setting up for the next key break either above $3,620 or below $3,580. The price action is positive, but buyers need to gain strength above $3,620 for a proper follow through.Technical indicatorsHourly MACD – The MACD is currently flat in the bullish zone.Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is placed above the 50 level, with a bullish angle.Major Support Level – $3,580Major Resistance Level – $3,620
Archives for February 12, 2019
Chainalysis Doubling Down in London
One of the first moves they will make with the cash injection is to double their employees in London. Accel’s London-based Phillippe Botteri gains a board seat at Chainalysis as a result.
The city is optimal for its proximity to top universities that increasingly recognize cryptocurrency as a technology poised to reshape the way people exchange value across the world. The office will position us to work with the major financial institutions and cryptocurrency businesses based in that market, as well as European governments.
Chainalysis is one of the biggest contractors with the IRS. As CCN reported last year, they received the bulk of the money the IRS spent tracking crypto payments – more than $5 million.
The raise is almost twice their Series A, and the company says it has significantly improved its operations since then. Last year, they launched their “Know Your Transaction” software. The anti-money laundering suite allows an exchange or other participant in the crypto economy to enter in a transaction ID and determine how “clean” it is.
As Tracking Companies Grow, Privacy Coins Gain Momentum
In this reporter’s experience, the very mention of “Chainalsyis” is enough to get cryptonaughts barking. Among the crypto-anarchist set, the company is unpopular. Financial privacy, a core tenet of crypto-anarchist thought, best manifests in privacy coins like Monero.
The old arguments about privacy come back. “If you have nothing to hide, what are you worried about?” The crypto-anarchist rolls their eyes.
However, another argument exists. Without companies like Chainalysis in the game, the government would continue to pose an existential threat to crypto as a whole.
Still, the traceability of cryptocurrency is far greater than that of traditional fiat cash. Important minds in the crypto space have identified this as a weakness. Litecoin’s going to have shielded transactions, according to creator Charlie Lee.
Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.
I am now focused on making Litecoin more fungible by adding Confidential Transactions. 🚀
— Charlie Lee [LTC⚡] (@SatoshiLite) January 28, 2019
After all, if a drug dealer comes into your gas station and buys a pack of cigarettes, the bank doesn’t scan the bills used and reject them from your deposit. Cryptocurrencies lose fungibility with “dirty coins.”
Financial Privacy Is A Requirement of Financial Freedom
Community-based solutions such as “coin mixing” have long existed.
Still, some in the crypto economy will have problems with the basics of Chainalysis’ mission. “Evasion of sanctions” is not seen as a problem for those who believe in true economic freedom.
“Our core objective is to organize the world’s blockchain data and make it accessible and useful to governments, financial institutions, and cryptocurrency businesses. We are doubling down on our investment in our people and technology that builds our understanding of how and why people use cryptocurrencies. Specifically, we are building a team that is focused on attributing more services associated with criminal activity, including darknet markets, scams, ransomware, terrorist financing, and sanctions evasion.”
Chainalysis, founded in 2015, are no longer the only company in the transactions analysis game. Elementus is another firm which works to provide as much information about blockchain data as possible. To date, they have used their powers for good, identifying that the Cryptopia hackers had stolen far more than reported. Later, they were the first to note that the Cryptopia hackers were back at it.
The crypto world is rapidly changing. Dark Net Markets like the Silk Road were arguably the first services to give real value to cryptocurrency. But they benefited largely from a sort of first-mover advantage. These days you can rest assured your friendly local government thug knows what Bitcoin is and, in many ways, you’re better off conducting any form of illegal transaction offline, in cash.
The total crypto market cap is showing positive signs above the $117.0B support level.Bitcoin cash price is gaining momentum and it could break the $125 and $128 resistances.EOS price rallied more than 5% and it looks set to break the $3.00 hurdle.Stellar (XLM) is slowly correcting higher towards the $0.0800 and $0.0820 resistances.Tron (TRX) is slightly under pressure below the $0.0255 support level.The crypto market could accelerate higher in the near term. Bitcoin (BTC), BCH, Ethereum, EOS, ripple, stellar (XLM), tron (TRX) and other major altcoins are likely to gain traction.Bitcoin Cash Price AnalysisBitcoin cash price found a strong buying interest above the $120 level against the US Dollar. BCH/USD started a fresh upward move and traded above the $122 and $124 resistance levels. It could continue to move higher and surpass the $125 and $128 resistances in the near term.If there is a downside correction, the previous resistance near the $122 level is likely to act as a decent support in the coming sessions.EOS, Stellar (XLM) and Tron (TRX) Price AnalysisEOS price performed really well and jumped more than 5%. It broke the $2.60 and $2.85 resistance levels. The next resistance is near $3.00, above which the price could surge towards the $3.15 and $3.20 levels.Stellar price is finding bids near the $0.0750 level and it is currently correcting higher. However, XLM is likely to face a strong selling interest near the $0.0800 and $0.0820 resistance levels.Tron price declined recently and settled below the $0.0255 and $0.0250 support levels. TRX price might climb higher, but it won’t be easy for buyers to gain traction above the $0.0255 resistance.Looking at the total cryptocurrency market cap hourly chart, there is a consolidation pattern formed above the $117.0B and $115.0B support levels. If the market cap climbs above the $118.0B and $120.0B resistance levels, there could be a sharp upward move in the near term. On the other hand, dips remain supported near the $116.0B and $115.0B levels. Overall, there are chances of more gains in bitcoin, Ethereum, EOS, ripple, LTC, bitcoin cash, XLM, TRX, and other altcoins.
Ripple price is currently showing a few positive signs above the $0.2980 support against the US dollar.Yesterday’s highlighted key declining channel is intact with resistance near $0.3035 on the hourly chart of the XRP/USD pair (data source from Kraken).The pair is likely to break the $0.3040 and $0.3060 resistance levels for a fresh upward move.Ripple price is slowly recovering against the US Dollar and Bitcoin. XRP/USD could gain bullish momentum once it breaks the $0.3040 and $0.3060 resistance levels.Ripple Price AnalysisIn the past few days, there was a steady decline in ripple price from the $0.3180 swing high against the US Dollar. The XRP/USD pair traded below the $0.3120 and $0.3040 support levels. It even traded below the $0.3000 support to move into a bearish zone. There was a dip towards the $0.2940 level and the price settled below the 100 hourly simple moving average. A low was formed at $0.2939 and later the price started a short-term rebound. The price climbed above the $0.2980 resistance, with bullish moves.The price even traded above the $0.3000 level, but the upside move was capped by the $0.3040 resistance. More importantly, yesterday’s highlighted key declining channel is intact with resistance near $0.3035 on the hourly chart of the XRP/USD pair. The pair traded as high as $0.3041 and it is currently trading near the 100 hourly SMA. An initial support is near $0.2990 and the 50% Fib retracement level of the recent wave from the $0.2939 low to $0.3041 high. However, the main support is near $0.2980 and the 61.8% Fib retracement level of the recent wave from the $0.2939 low to $0.3041 high. Therefore, if there is a downside correction, the price might find support near $0.3000, $0.2990 or $0.2980.Looking at the chart, ripple price is showing a few positive signs above the $0.2980 support. Should buyers push the price above the $0.3040 resistance, there are chances of more gains towards $0.3060 and $0.3100.Technical IndicatorsHourly MACD – The MACD for XRP/USD is slightly placed in the bullish zone.Hourly RSI (Relative Strength Index) – The RSI for XRP/USD is now placed well above the 50 level.Major Support Level – $0.2980Major Resistance Level – $0.3040
ETH price is slowly moving higher and it remains well supported near $119 against the US Dollar.There is a major bullish trend line formed with support at $119 on the hourly chart of ETH/USD (data feed via Kraken).The pair could dip a few points, but it is likely to find buyers near $119, $118 or $117 in the short term.Ethereum price is placed nicely in a bullish trend against the US Dollar and bitcoin. ETH/USD may continue to move higher towards $125 and $128 in the coming sessions.Ethereum Price AnalysisRecently, we saw a short term downside correction from the $125 high in ETH price against the US Dollar. The ETH/USD pair traded below the $122 and $120 support levels. However, the $117-118 area acted as a strong support and prevented further losses. Downsides were contained and later the price moved back above the $119 resistance level. Besides, there was a break above the 50% Fib retracement level of the recent drop from the $125 high to $117 swing low.The price even spiked above the $121 level and it is currently well above the 100 hourly simple moving average. However, the recent upward move faced sellers near the $122-123 zone. Additionally, the 61.8% Fib retracement level of the recent drop from the $125 high to $117 swing low acted as a resistance. The price is currently placed well above $120 and it seems like it may continue to move higher. On the upside, the main resistances are near the $123 and $125 levels. On the downside, there is a major bullish trend line formed with support at $119 on the hourly chart of ETH/USD.Looking at the chart, ETH price is clearly trading with a positive bias above $117 and $119. If there are corrective moves, buyers are likely to protect declines below $117. On the upside, a break above $125 might push the price towards the $128 level.ETH Technical IndicatorsHourly MACD – The MACD for ETH/USD is currently moving in the bullish zone.Hourly RSI – The RSI for ETH/USD is currently just below the 60 level, with a slight bearish angle.Major Support Level – $119Major Resistance Level – $123
According to the latest court documents in the ongoing QuadrigaCX case, the exchange sent roughly $470,000 CAD (approximately $355, 000 USD) worth of bitcoin from a hot wallet to a cold-storage wallet on February 6, 2019.
Ernst & Young’s first report as monitor of scrutinized Canadian bitcoin exchange QuadrigaCX (QCX) complicates the story the exchange has given for its lack of access to company funds following the death of its founder and CEO, Gerald Cotten.
The court document states, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”
Regarding the liquidation process for distribution of QCX funds to the exchange’s users, the report says that Ernst & Young has established a “Disbursement Account” per the Nova Scotia court’s orders, “and [it] received $150,000 from Ms. Jennifer Robertson” (Cotten’s widow) to kickstart the account.
The document continues to clarify that the exchange’s remaining hot-wallet funds (some $902,000 CAD, of which $700,000 CAD is in bitcoin, $130,000 CAD in ether and the rest in bitcoin fork coins and litecoin) will be transferred to cold storage under Ernst & Young’s management.
In an affidavit that comprises part of the ongoing legal proceedings in the Court of Nova Scotia, Robertson swore that the exchange had no access to the cold storage because the keys and passwords are stored in one of Cotten’s encrypted wallets.
According to the document, Ernst & Young has also seized Cotten’s computer hardware and accessories, which Robertson originally turned over to retired cybersecurity professional Chris McBryan of McKalian Sensors Inc. to crack.
“The devices taken into custody from Mr. McBryan include two (2) active laptops, two (2) older model laptops, two (2) active cell phones, two (2) older ‘dead’ cell phones and three (3) fully encrypted USB keys. … The Monitor’s forensic group is currently working with Mr. McBryan to better understand actions that have been taken in respect of the devices and what information has been obtained from the devices to date to determine what forensic next steps will be employed. In addition, the Monitor was made aware of and took steps to retrieve Mr. Cotten’s desktop,” the report reads.
Recovering Lost Funds
The document also confirms that Ernst & Young has contacted nine of the known payment processors that served as QuadrigaCX’s makeshift banking partners. The firm has not yet received the $30 million CAD in bank draft notes that both the court affidavit and the report say are under the auspices of Stewart McKelvey, the law firm representing both Robertson and QuadrigaCX. One of these processors allegedly owes the exchange $25.2 million of the $30 million in bank notes QuadrigaCX holds. Once the banks that these processors work with clear wires for these bank notes, the funds will fall under Ernst & Young’s management.
QuadrigaCX had been using these payment processors as a stand-in for proper banking relationships. As sources close to the matter, who asked to remain anonymous, told Bitcoin Magazine, QuadrigaCX has a long history of problems in maintaining banking relationships, a tribulation best represented by CIBC freezing $25 million CAD of funds associated with the exchange in 2018. This freeze was one of many unhappy incidents that have come to define the exchange, including losing millions in ether in 2017 to a smart contract bug and a reputation for month-long withdrawal times.
Speculation and Rumors
Since Gerald Cotten’s death, wild speculation over QuadrigaCX’s solvency, the identity of a since-distanced cofounder Michael Patryn and whether Cotten is actually dead have surfaced in the community. A purported QuadrigaCX contractor, one of the seven that made up the company’s employee structure until recently, posted a reddit AMA on r/QuadrigaCX2 with potentially damning accusations that Cotten and Robertson worked in tandem to scam the exchange’s users. These accusations remain unsubstantiated thus far.
Canadian lawyers will convene on February 14, 2019, in Halifax in a bid to represent some 111,000 users affected by the exchange’s misfortune, Bloomberg reports. In its February 5 ruling, the Court of Nova Scotia granted QuadrigaCX creditor protection, guarding it from further court action until the exchange and Ernst & Young are able to investigate its financial situation.
In what is bound to be pleasing to the ears of U.S. President Donald Trump, Egyptian billionaire Naguib Sawiris has sided with the hardline stance that the leader of the world’s largest economy has taken amid the ongoing U.S.-China trade war.
Speaking with CNBC, Sawiris agreed with Trump’s well-known sentiment that China has been taking advantage of the United States and other countries.
“President Trump is right about that: This has been a long time where we closed eyes on China raping us.”
Sawiris has expressed his fondness for Trump in previous interviews.
Sawiris Sides with Trump on Trade War, Huawei Scandal
Sawiris, however, warned that China would only make those changes that don’t threaten its future:
“But I think the leadership is smart, so they will change what they can change. If you tell them, ‘You need to change your whole system,’ they won’t be doing that.”
As an investor in the telecommunication sector, Sawiris agreed with the concerns that have been raised concerning Chinese telecommunications giant Huawei. Already, Huawei is facing a lengthy indictment from the U.S. Justice Department.
Huawei Faces Criminal Charges, Officials Say This Won’t Hurt US-China Trade Talks https://t.co/jSCxDntN4S
— CCN.com (@CryptoCoinsNews) January 28, 2019
Sawiris has claimed the actions the U.S. has taken or is planning to take against Huawei are justified:
“I think there is genuine concern, and I think it’s justified. It’s actually taking the West very long to — I mean, you know, telecom was my domain — to get worried. I think they should be worried.”
Trump Administration’s Aggressive Campaign Against Huawei
Stemming from the United States’ campaign against Huawei, several countries have banned the use of the networking gearmaker’s products in their territory. This is especially true with regards to the development of 5G networks. Such countries include New Zealand and Australia.
Recently, U.S. Secretary of State Mike Pompeo warned that European countries would have to choose between the U.S. and Huawei. Additionally, Pompeo added that the use of Huawei networking equipment would compromise privacy and national security. Per Pompeo, the U.S. will not be able to continue partnering with countries whose telecommunication infrastructure runs on Huawei equipment:
“It also makes it more difficult for America to be present. That is, if that equipment is co-located where we have important American systems, it makes it more difficult for us to partner alongside them.”
European Countries Now Playing Cautious with Huawei
The U.S. Secretary of State was speaking in Hungary, and even though he didn’t mention names, his message was seen as directed at the central European country.
While they have not effected bans on Huawei equipment, European countries such as the United Kingdom and Germany have taken measures to ensure the Chinese networking gearmaker plays by the rules.
According to CNN, Huawei is spending approximately $2 billion in addressing the security concerns raised by government agencies. Similarly, German Chancellor Angela Merkel indicated last week that Europe’s biggest economy was involved in efforts to ensure safeguards for data privacy with regards to Huawei.
The Egyptian billionaire has, however, warned that the treatment Huawei is receiving could lead to retaliatory measures from China:
“If I’m Chinese, I might not any take equipment from Motorola, for example.”
Naguib Sawiris Image from Patrick BAZ / El Gouna Film Festival / AFP
On February 12, Ernst and Young (EY), the monitor of the QuadrigaCX case, released its first report with the Supreme Court of Nova Scotia. In it, EY stated that the exchange “inadvertently” moved $370,800 in Bitcoin to a cold wallet controlled by CEO Gerald Cotten, who passed away.
The report of the monitor read:
“On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately CAD $468,675 to Quadriga cold wallets which the Company is currently unable to access.”
“The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”
Throughout the past several weeks, CCN extensively reported about QuadrigaCX and the story involving the CEO of the company who reportedly died with the passwords to the exchange’s cryptocurrency cold wallets containing user funds.
What Does This All Mean to the Bitcoin Holdings of Users?
If the CEO passed away and the access to the company’s cold wallets or offline wallets cannot be restored, the $370,800 in Bitcoin “inadvertently” sent to the cold wallet cannot be recovered.
As such, for now, the company and the creditors of QuadrigaCX only have access to the company’s hot wallets. But, EY disclosed that the hot wallets of QuadrigaCX have less than $1 million in them, which is nowhere enough to pay back users who the company owes well over $150 million to.
“The Monitor was advised that Quadriga held the following cryptocurrency balances (with approximate Canadian currency equivalent aggregating to $902,743) within its hot wallets on its servers as at the Filing Date,” EY said.
Whether it is a hot wallet or a cold wallet, major cryptocurrency exchanges typically go through additional measures to ensure that funds are sent to the right address.
Sending $370,800 in Bitcoin from a hot wallet to a cold wallet the company knows cannot be accessed is equivalent to a company sending hundreds of thousands of dollars to a wrong bank account that the company does not control, which just does not occur.
Already, as reported by The Wall Street Journal, suspicions on the legitimacy of the explanation provided by QuadrigaCX on the loss of $190 million in funds intensified as independent researchers could not find sufficient evidence to prove the existence of cold wallets owned by the exchange.
In its report, EY said that it is attempting to access any cold wallets that exist, which suggests that wallets that can be considered as cold wallets have not been found yet.
The monitor said:
The Applicants and the Monitor will continue with their efforts to access Mr. Cotten’s devices, find and access any Quadriga cold wallets that exist, and locate any other cryptocurrency belonging to Quadriga and report back to the Court in respect of these activities.
The Unbelievable Story of Bitcoin Exchange QuadrigaCX
When the case of QuadrigaCX was first publicized, Kraken CEO Jesse Powell said on February 2 that the story of the exchange is “bizarre and, frankly unbelievable.”
We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder’s death and lost keys. I’m not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx
— Jesse Powell (@jespow) February 3, 2019
Even at the time, due to the movement of some cryptocurrency wallets linked to the exchange, analysts were skeptical towards the nature of the lost wallets and whether the statement of the exchange could be backed with sufficient evidence.
The EY report comes in a period in which analysts and industry experts are not certain whether the cryptocurrency cold wallets held by the CEO of the exchange exist.
The monitor has confirmed that $370,800 in Bitcoin was sent to a cold wallet, and that may mean that the monitor has found at least one of the cold wallets the exchange allegedly does not have access to.
In the upcoming weeks, EY is expected to continue the search for the company’s missing crypto wallets by going through the devices owned by CEO Gerald Cotten.
Read the full EY report below:
EY QuadrigaCX Report by on Scribd
Featured Image from Shutterstock
Bitcoin (BTC) may have lost over 80% of its value over the past 13 months, but many have argued that its underlying value proposition has only become more and more apparent. Hasu and Three Arrows’ Su Zhu, two crypto researchers, touched on the subject matter on Tuesday, when they released a collaborative blog post outlining the value that Bitcoin poses to a society rife with government-issued digital money.Related Reading: Banks are Better than Bitcoin (When It Comes to Money Laundering)E-Money To Make Society Vulnerable To Surveillance, ControlCash, not money (yes, there’s a difference), has existed for hundreds, if not thousands of years. For those who missed the memo, cash is inherently a peer-to-peer, permissionless, and private medium.Yet, with the rise of the digital payment services in mind, Hasu and Zhu argue that the hegemony that forms of cash has established itself could be coming to an end. The duo writes that PayPal, Venmo, Square, and products of similar caliber and nature “remove every need for cash,” as they’re marketed as faster, cheaper, and more efficient forms of payment.New article with @zhusu where we argue that the elimination of cash, even if most payments are already digital, will make society more vulnerable to surveillance, financial control, and authoritarianism.https://t.co/kRVwaJM7Cr— Hasu (@hasufl) February 12, 2019The database tracking these transactions made with online money is already available for the powers that be, allowing the establishment to watch over society with a Sauron-esque eye. And with the seemingly relentless rise of these services and ecosystems, cash could become a thing of the past in the near future. They explain:“The use of cash in larger denominations has become so stigmatized in the US and Europe that withdrawing or carrying above a certain amount requires explicit government permission… We will argue that the elimination of cash, even if most payments are already digital, will make society more vulnerable to surveillance, financial control, and authoritarianism.”While the absence of private, permissionless mediums of exchange wouldn’t necessarily be a problem if humans were non-fallible, such a sterile utopia only exists in the minds of sci-fi writers. Thus, Hasu and Zhu noted that while governments would claim that going cashless protects citizens, censorship, fund confiscation, and the like would become the norm.But that’s where Bitcoin comes in. They explain that the crypto asset could become a viable hedge against a cashless society. It was noted that while Bitcoin evidently has a use case as a deflationary asset, much like gold, it’s best used as a new breed of money — digital cash, “that combines the benefits of physical cash with the benefits of digital payments.”Bitcoin Has A Bright FutureHasu and Zhu aren’t the only industry insiders with this specific thesis regarding Bitcoin’s value in the real world. Arthur Hayes, the chief executive of the Hong Kong-headquartered BitMEX, took to his company blog at the start of 2019 to make a similar argument, accentuating that an entirely cashless society isn’t optimal.As reported by NewsBTC previously, Hayes explained that as technology and the Internet continue to overtake all facets of society, a centralized, government- and corporation-backed e-money will likely become only “natural.” While such a system would be efficient for the common Joe and Jill, who crave for convenience and efficiency, such a form of sovereign digital money would increase the propensity for consumers to hand over their formerly private data.Much like Hasu and Zhu, Hayes explained that the world’s first blockchain network is uncensorable, borderless, non-inflationary, and most importantly (in the eyes of Hayes), private — a far cry from the centralized monetary systems of the future. The BitMEX CEO explained that privacy is an integral part of any well-function society, making a system like Bitcoin more than essential.Even if society doesn’t opt to adopt a fiat digital medium of exchange, many argue that Bitcoin still has a very bright future ahead of itself. In comments made at an alternative investment event in the Grand Cayman, Travis Kling, the chief investment officer of the Los Angeles-based Ikigai, remarked that Bitcoin is a perfect hedge against “fiscal and monetary policy irresponsibility.” He stated that the monumental rise of employed quantitative easing (QE) strategies is “how you would write the script” for the adoption of cryptocurrencies, especially ones that are fully decentralized.Featured Image from Shutterstock
The popular cryptocurrency exchange Coinbase has launched a new feature for its stand-alone digital asset wallet. The software will offer users the ability to back up their private keys using either Google Drive or iCloud.The idea is to give users of the Coinbase Wallet a safety net in the event that they lose access to the device upon which the software is installed or happen to misplace their private keys somehow. However, some in the cryptocurrency community have highlighted that the saving of private keys on cloud storage services could expose users’ funds to additional threats.Cloud Storage of Keys Comes to Coinbase’s “User-Controlled” WalletSan Francisco-based Coinbase is one of the few exchanges to launch its own wallet software, helping promote the kind of monetary sovereignty Trace Mayer’s “Proof-of-Keys” event championed on the 10th anniversary of the Bitcoin network going live. Users of the Coinbase Wallet are the sole holders of their private keys. As such, they potentially enjoy a much higher degree of security than those choosing to leave money on centralised exchanges, which are prone to hacks and other security breaches.The latest feature launched for the Coinbase Wallet is a built in option to back up the user’s private keys to either Google Drive or iCloud. This is supposed to provide them an additional way to access their cryptocurrency holdings should they lose access to the wallet for some reason.According to a Coinbase blog post, copies of the private keys stored to the cloud will be encrypted and require the wallet’s password to access:“Your backup is encrypted with AES-256-GCM encryption and accessible only by the Coinbase Wallet mobile app. The backup can only be decrypted using your password.”The post goes on to state that Coinbase will not have access to users’ passwords or funds at any point when using the wallet. They also state that the cloud service provider will not have access to either since the keys can on only be decrypted with the user-set password.Coinbase says that it still encourages users of its wallet software to backup their private keys manually. The post also reminds users of the importance of using two-factor authentication as an additional security precaution.Optimisation for Convenience Always Costs Some SecurityNot everyone is impressed with the latest update for the Coinbase Wallet. Podcaster and long-time Bitcoin proponent @WhalePanda Tweeted the following:At the @coinbase team meeting: “What’s the dumbest thing we could come up with now that we’ve gone full shitcoin?”https://t.co/8JaLv8W7j4— WhalePanda (@WhalePanda) February 12, 2019In the comments to the above Tweet, other community members voiced their concerns about the update. One called it a “hackers dream”.Others were more understanding of Coinbase’s stated motives in their responses but still called it a dangerous idea generally:To be fair, it’s an encrypted backup. Unfortunately most people don’t bother making their passwords secure, and relying on there being no bugs with the encryption implementation just adds one more thing to worry about.— ⚡Random Name (@username0ne) February 12, 2019Others still argued that such user-friendly functions on digital currency wallets are necessary if Bitcoin and others are to see the sort of widespread adoption many in the space are hoping for:If you want mass adoption, you have two options. Banks hold Bitcoin, so people can spend it with their Credit Cards or you simplify Wallets as far as possible, key backups are the most critical part.— skiddi3 (@skiddi3_) February 12, 2019Whilst it is certainly true that users of the Coinbase wallet opting to back up their keys to the cloud are creating an additional attack vector against themselves, for some the convenience will be worth the slight reduction of security. No cryptocurrency storage method is truly impenetrable and different types of users require different levels of security. Some are willing to sacrifice a little (or even a lot) for greater convenience. Providing they are aware of the additional risks, they should be free to make their own decisions. Related Reading: New Coinbase Venture Lets You Earn Free Crypto, BAT Surges 30%Featured Image from Shutterstock.