Video and slides synchronized, mp3 and slide download available at URL https://bit.ly/2Oaza9E. Amy Yin talks about Coinbase Commerce, a user-controlled payment processor, and explains how Coinbase uses hierarchical deterministic wallets to separate the ability to spend funds and the ability to receive funds so that the merchant can always be in control of their financial destiny. Filmed at qconnewyork.com. Amy Yin is a software engineer at Coinbase and was the first engineer hired for Coinbase Commerce, a non-custodial payment processor that allows merchants to accept cryptocurrencies. She is now building out a new team within the Coinbase consumer flagship product, Coinbase.com, to help investors grow and diversify their portfolios.

1. Using Hierarchical Deterministic Wallets to build a Non-
Custodial Payment Processor
Amy Yin
June 28, 2018
QCon NY Blockchain Track

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Watch the video with slide
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coinbase-process-processor

3. Presented at QCon New York
www.qconnewyork.com
Purpose of QCon
- to empower software development by facilitating the spread of
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Strategy
- practitioner-driven conference designed for YOU: influencers of
change and innovation in your teams
- speakers and topics driving the evolution and innovation
- connecting and catalyzing the influencers and innovators
Highlights
- attended by more than 12,000 delegates since 2007
- held in 9 cities worldwide

4. @yin_amy

5. Our mission is to create an
open financial system
for the world
3

7. Are we bringing people closer to
openness?

8. 8
Utility (100M+ people)
Open Financial System (1B+ people)
Investment (10M+ people)
Our secret master plan
Protocol (1M+ people)

9. Professional Exchange
“NYSE for digital currency”
Retail Brokerage
“Fidelity for digital currency”
Investment and Trading
11
Institutional Custodian
“State Street for crypto”
Index & Fund
“S&P500 for Crypto”

10. Ɖapp Browser & Wallet
“Explore web 3.0”
User-controlled
12
Payment Processor
“Paypal for crypto”
ERC20 Relayer
“Peer-to-peer trading”

11. 13

12. Crypto for Merchants

13. If you can generate a random number…
you start accepting payments
Globally Inclusive

14. Be your own bank

15. No trusted third-parties

16. Keys

17. Private Keys

18. K = k * G
Elliptic Curve Cryptography

22. K = k * G
Elliptic Curve Cryptography

23. 25

24. What is a Wallet?

27. JBOK Wallet
- Non-deterministic Wallet Address Generation
- “Just a bunch of keys” wallet

28. The Trilemma

29. Privacy

30. The Trilemma
Balances are transparent on blockchain

31. Usability

32. The Trilemma
Balances are transparent on blockchain
Hard to manage many private keys

33. Control

34. The Trilemma
Balances are transparent on blockchain Third party custodianHard to manage many private keys

35. The Trilemma

37. Hierarchical Deterministic Wallets

38. Extended Public Keys

41. M/44'/ 0'/ 0'/ 0/ 2
xpub6CAxG74VP
xprv9yBbrbXbYm

43. SOLVING the Trilemma
● Generate and Manage
Public Keys (usability)
● One-time use addresses to
preserve privacy
● Merchants should
maintain control over the
private keys

64. 68
Finance 1.0 vs Finance 2.0
Settlement Time
Push/Pull
Borders
State Machine
Account Status

65. 69

66. 70

67. Thank you!

68. amy.yin@coinbase.com
@yin_amy
Simple Investing Eng Manager

69. References
Antonopoulos, Andreas M.. Mastering Bitcoin: Programming the Open
Blockchain (p. 93). O'Reilly Media. Kindle Edition.
https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki
https://github.com/bitcoin/bips/blob/master/bip-0043.mediawiki
https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki
https://github.com/satoshilabs/slips/blob/master/slip-0044.md

70. Coinbase Commerce is focused on making cryptocurrency
the best way to pay. We want to make accepting and using
cryptocurrency 100x better than accepting and using credit
cards.
● Usability - Dramatically lower the barrier to getting
started. 5 mins to get started vs. 5 days.
● Privacy - We generate one-time use addresses for each
customer.
● Control - Merchants maintain full control over their funds.
We use public keys to generate addresses on the
merchant’s behalf.
Coinbase Commerce

71. Coinbase Commerce
We recently launched (Feb 14th) and focused on these three areas:
● Low barrier to entry - We’ve drastically simplified the
onboarding requirements such that anyone that has an email
address can start accepting digital currency.
● Coin agnostic - We don’t know which digital currency will “win”
and so being able to respond to market demand is critical.
● Decoupled infra - We’ve decoupled payment processing from
currency exchange to greatly reduce our attack surface and
maintain a focus on improving the payment experience

72. Watch the video with slide
synchronization on InfoQ.com!
https://www.infoq.com/presentations/
coinbase-process-processor