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KeepKey and Shapeshift team up for dynamic and secure cryptocurrency trading

KeepKey and ShapeShift recently announced a partnership to create the first fully trustless, highly secure, process for trading cryptocurrencies. According to KeepKey, beta testing will begin next week.

UPDATE March 2021: After the KeepKey purchase the Multibit project has been shut down. For historical information on Multibit and guides on how to get Bitcoin into a new wallet, this article explains Multibit’s history, including background on its founders, the project’s acquisition and how wallet holders can move forward.

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“We are incredibly excited to announce our partnership with KeepKey, the first-ever hardware wallet to integrate with ShapeShift to enable their users to instantly exchange between leading digital assets like Bitcoin, Litecoin and Dogecoin, with plans for integrating more digital assets well underway.”
— – ShapeShift

Formed in mid-2014, ShapeShift was founded by early bitcoin entrepreneur Erik Voorhees. The company is located in Switzerland’s “Cryptovalley Zug,” a small suburb of Zurich that is home to a number of blockchain companies. The company’s platform provides instant cryptocurrency conversion between bitcoin and several altcoins.

The service has proven to be a fast and efficient way to convert between cryptocurrencies, mainly because it requires no identification of any kind, which also makes it attractive to privacy advocates. ShapeShift excludes fiat trading on the exchange, bypassing currency laws, banking relationships, and government censorship.

The platform’s dominance in the field has only recently been tested by decentralized exchanges such as BitSquare and the OmniDEX. These decentralized cryptocurrency exchanges are software programs that allow for trading cryptocurrencies with tokens that represent fiat money, such as Tether’s USDT.

“KeepKey works with the bitcoin wallet software on your computer by taking over the management of private key generation, private key storage, and transaction signing.”
— – KeepKey

KeepKey is located in Seattle, not far from Microsoft’s Redmond world headquarters. Founder and CEO Darin Stanchfield, and his team, announced the launch of their hardware wallet for bitcoin, in July 2015. What made it different from the start was a unusually large and readable screen coupled with a hardened body that could take more of a pounding.

The company has been fighting for dominance in the hardware wallet race ever since. The device cost more than twice as much as competitors Trezor and Ledger, US$239 shortly after launch.

Although smaller, Both Trezor and Ledger wallets integrated many more wallet services and websites than KeepKey did, making the most expensive wallet appear the least useful.

In May of this year, bitcoin wallet MultiBit announced that KeepKey was buying their company and integrating their wallet. Around the same time, the price of a KeepKey plummeted to $99, making it the same price as its primary competitor, the Trezor hardware wallet.

The price of a KeepKey has since dropped even further, to $89, perhaps to compete with the new, smaller Ledger Nano S wallet. The new device is keychain-sized, and has similar functionality to both the KeepKey and Trezor.

“More and more people everyday are starting to appreciate the benefits of controlling your own private keys. Hardware wallets make doing this secure. KeepKey makes it secure and easy.”
— – KeepKey

At the end of July, mobile wallet Mycelium added support for KeepKey, and KeepKey added support for the ever-popular Electrum client as well. Between the new integrations and the new lower price, KeepKey has been rapidly catching up to competitors.

Pairing a secure device like the KeepKey to the trustless exchange ShapeShift is particularly unique because there has never before been a way to trade currencies online in a way that a skilled hacker had no way to intercept.

Passwords, private keys, and any other data-based authentication allowing people to authenticate who they are online were always at some small risk of being stolen or spoofed.

ShapeShift doesn’t need to authenticate any users, and the concealing nature of KeepKey doesn’t put the private key onto your computer. All key signing to send funds is done on the device itself, so there is no point at all where a private key is online to be stolen. Simply put, this configuration leaves nothing for a hacker to steal.

“The KeepKey hardware wallet has become ShapeShift ‘aware’. You are now able to simply exchange between crypto currencies stored on KeepKey, without ever putting your private keys (or your funds they secure) at risk.”
— – KeepKey

According to ShapeShift, the integration is the first time users can store and trade digital assets without ever having to expose their private keys to the internet. “This is a HUGE step forward in security for traders,” the exchange wrote.

KeepKey was quick to reference the recent BitFinex hack as an example of why the pairing is needed. “A few weeks ago a large crypto currency exchange was hacked, resulting in the loss of a large portion of its customer’s funds,” KeepKey’s blog post said. “Unfortunately this will unlikely be the last time we see an exchange get attacked.”

Ever since the hack and resulting ‘socialized losses’ applied to all of the exchange’s users, the phrase ‘If you don’t control your private keys, you don’t own your bitcoin’ has been constantly repeated across Bitcoin social media outlets, much like it was after the MtGox failure in early 2014. KeepKey, Trezor, and Ledger were all created to secure private keys better than any other type of solution.

For existing KeepKey owners, an upgrade of KeepKey’s open source firmware will be required to start trading. Cryptocoin traders can then use the device to initiate a trade for currencies listed on the ShapeShift exchange.

KeepKey says that Bitcoin, Litecoin, and Dogecoin will be supported at launch “with more to soon follow.” There are 39 different cryptocurrencies currently showing on ShapeShift website.

“KeepKey’s new firmware includes a feature called Policies, and the ShapeShift policy must first be enabled. Otherwise, transactions will appear as normal crypto currency transactions.”
— – KeepKey

“By default for all users, this ShapeShift-ability is disabled,” the KeepKey announcement said. With the ShapeShift policy enabled, “KeepKey goes through the extra steps of verifying the exchange request originated from ShapeShift unchanged and that the exchanged currency and refund addresses belong to KeepKey,” their announcement explains. “The details are then presented on device and must manually be confirmed.”

Stanchfield revealed the goals for the program in his announcement, added security and convenience to a larger audience. “While digital asset security is KeepKey’s primary goal, we are making life easier for the growing number of consumers buying, selling and storing several types of cryptocurrency,” he explained. “They can swap whatever they like, whenever they like, without the hassle of setting up multiple wallets or addresses or signing up to various exchanges."


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