Coinbase Passkeys: Technical and Strategical Analysis

Introduction

Coinbase, a leading player in the cryptocurrency exchange market, has joined the ranks of tech giants like Uber, Amazon, and PayPal in adopting passkey technology. This move, following in the footsteps of Binance, signifies Coinbase's commitment to staying at the forefront of digital security.

Passkeys at Coinbase

Coinbase supports passkey authentication on various devices and browsers, catering to its technically savvy user base. In the volatile world of cryptocurrencies and NFTs, where scams and hacks are rampant, the need for robust security is paramount. Passkeys, leveraging public key cryptography a foundational element of blockchain technology / cryptocurrencies offer a secure authentication method. This synergy is particularly relevant as more web3 entities adopt passkeys.

However, the implementation at Coinbase has its nuances. Users must provide their existing 2FA, such as a Google Authenticator code, when setting up a passkey. This requirement persists for each login, potentially impacting user experience by necessitating a secondary authentication step. While this enhances security, it somewhat diminishes the convenience that passkeys typically offer.

Coinbase has made efforts to guide users through this new system, including clear instructions and explanatory videos. Yet, there are UX challenges; for instance, the use of Chrome Custom Tab on Android or SFSafariViewController on iOS, rather than a native implementation, leads to a less seamless experience. Additionally, our tests indicate potential issues with passkey creation on Windows 11 with Chrome, suggesting a possible exclusion of single-device passkey setups for Windows users, likely due to recovery complexities.

The Strategic Advantage of Passkeys for Coinbase

For platforms like Coinbase, where Know Your Customer (KYC) and authentication processes are critical, passkeys offer a strategic advantage. They streamline user experience, potentially boosting conversion rates, while significantly enhancing security to counter threats like account takeovers (ATOs) and other cyber attacks. This dual benefit aligns perfectly with the needs of a cryptocurrency exchange.

Conclusion

Coinbase's foray into passkey technology underscores a growing trend in the digital world: the pursuit of enhanced security without compromising on user experience. While there are challenges and nuances in its implementation, the strategic advantages for platforms like Coinbase are clear.