Coinbase (NASDAQ: COIN) recently announced that its users could take advantage of cloud storage to store a backup of their private wallet keys. The cryptocurrency access codes can be stored using services such as Google Drive or iCloud, making the keys readily available from anywhere in case the primary storage device is lost or damaged. The announcement hasn’t been accepted as enthusiastically as Coinbase may have hoped, and a growing number of crypto fans is calling out the decision.
In announcing the capability, Coinbase stated, “If you lose your device or get signed out of the app, you can easily regain access to your funds with the combination of your personal cloud account (iCloud or Google Drive) and your password,” adding, “The private keys generated and stored on your mobile device are the only way to access your funds on the blockchain.”
While it may seem like a good idea on the surface, there are a myriad of issues that come into mind. Crypto wallet information must be highly secured – a simple password that can easily be hacked won’t suffice. Google, one of the most powerfully advanced technology companies in the world, is removing Google+ soon, ostensibly because it wasn’t gaining traction with customers. However, there is the fact that it was compromised by hackers, who gained access to personal data of almost 500,000 users.
Kraken CEO Jesse Powell called out Coinbase for the backup service, stating on Twitter, “I am not a fan of training users on bad security. Cloud storage, while convenient, is constantly compromised, especially with all the SIM porting. 99% chance the people who would unwittingly use this do not have passwords strong enough to withstand professional cracking.”
In responding to Coinbase’s tweet about the capability, “TheCryptoDog” chimed in, “I don’t understand, how do you misunderstand your target audience so bad?”
In responding to the company’s blog post on the announcement, Mike Hunt stated, “This is a pretty shocking post. As a community manager for a few cryptocurrency projects I have talked to a lot of people who lost their funds from keeping private keys on cloud storage. Why would you recommend this and even have in app notifications to get people to do this? Please tell me there is something I’m missing because you couldn’t possibly be promoting bad cryptocurrency safe practices like this.”
Google+ isn’t the only platform to have been hacked. iCloud was hacked in 2014, exposing the data of a number of users. Last year, Chinese iCloud users found their accounts hacks and funds swiped from their linked WeChat and AliPay accounts.
Promoting cloud storage for sensitive data seems to be a step backward for Coinbase and is certainly puzzling. However, perhaps it’s just an attempt to divert responsibility. If an account is hacked, Coinbase can just blame it on cloud storage.
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