CoinKite Bitcoin wallet review

 Important info
    Wallet Type:  Web
    Verification:  Trusted Server
    Multisig:  Yes
    Open source:  No
    Privacy :  Poor
    Crypto supported:  bitcoin
    Vulnerability to malware:  Vulnerable
    Private key stored:  both client and server side

Pros
    Extremely robust and adjustable multisig
    Excellent accounting tools integrated
    Offers enterprise solution for merchants
Cons
     Retail clients, when accepted, were charged annual fee above 1 btc held
    Have shifted focus entirely to enterprise solution
    Pivot portends of monetization issues

Summary

CoinKite wraps all the latest in bitcoin wallet innovation in a user-friendly, multi-device platform designed to appeal to both bitcoin newcomers and veterans with more exacting technological requirements. Offering advanced multiple signature functionality, 32BIP HD wallet convenience and client-side seed generation and encryption, CoinKite delivers an extremely secure wallet while maintaining ease of use, fund accessibility and privacy.

There are five different plans available to users, ranging from a free service allowing one multisig sub-account and a limit of 1 BTC storage in the hot wallet, to an enterprise solution offering a range of specialized merchant-related services and features.

The Coinkite Wallet

Coinkite offers three different types of wallets: a hot wallet, a multisig vault, or a watch-only wallet.

All wallet types are BIP32 Hierarchical Deterministic, meaning that users can generate as many bitcoin addresses as they would like from a single "seed". All the addresses will be mathematically connected to the master public key contained within the seed, which itself is connected algorithmically to the private key. So all addresses created in the future from the public key are tied back to the seed. This has a few important benefits.

First, if needed the user can restore all wallet addresses ever created with just the seed. This is very convenient compared to traditional wallets, in which backups need be generated after each new address is created. Thus, if coinkite were to fail, or a user were to lose his password, all addresses could be restored on any other BIP32 wallet provider, with just the seed. Second, HD wallets allow users to create additional addresses online, while keeping the private key entirely offline for security.

When opening a hot wallet users receive their public and encrypted private key by email. Funds are held in CoinKite's proprietary "Hardware Secure Module" (HSM), which they describe as being unique to cold storage, but with easier access. The second key, called the symmetric key, is held on the CoinKite server and is necessary to extract the hot wallet funds held in HSM (and this is managed automatically by CoinKite). This means that the hot wallet funds are not entirely in control of the user. In a CoinKite statement on the matter: "Coinkite has committed that in the event of the closure or other failure of the business, we will publicize the symmetric key protecting the xprivkey values that have been distributed to members. With that key, each user can recover their own funds by re-generating the private keys". The system provides great security, but is meant only to hold spending cash. Bitcoin savings should be held in the multisig account, which is controlled entirely by the client.


The multisignature account can be set to require from 1-1 to 15-15 signatures, and everything in between. The different signing levels allows configurations suitable for a single household in which wife and husband signatures are required, or a larger business in which, say, 5 of 8 principles are needed to sign off transactions. The signature requirements, which can be set once at account opening, can be adjusted to suit the particular needs of a client.

In a multisig scheme, each signature has it's own corresponding private key. CoinKite offers a number of different ways of holding that key.

The easiest way is within CoinKite's HSM server, where users may choose for the key to be encrypted behind a mnemonic password. CoinKite also offers a client-side private key generation option, which means it is never seen server side. There are additional options, if required, to generate the private keys offline entirely. Non-CoinKite users can be invited to hold keys as well. The client-side key generation is offered as a solution for them, though to take advantage of key storage in the HSM server they would need to open an account.

Watch-only accounts are used to monitor addresses held elsewhere. When opening a Watch onliny account, simply enter the public address. CoinKite will monitor the blockchain and display inbound and outbound transactions made from the watch-only address, but there is no access to the addresses funds.

Different account types

One of the big questions in the bitcoin wallet space is how products can be monetized, and venture capital is pouring into the segment in the belief that there is a profitable answer to the question. While the free services are fantastic, for continued innovation and investment, eventually there will have to be some money in it for the service providers.

CoinKite's has a basic free service, and an additional four different account types, personal, professional, business and enterprise.


The free and personal accounts are geared towards individual users. The free service allows only one hot wallet and one multisig account, each with only one sub account (i.e. an additional address within the wallet). There is a limit of 1 BTC that can be held in the hot wallet. These limitations on the account can be a bit frustrating, so for more serious bitcoin users, the personal account might be more convenient. At a cost of $93.99 a year, users are allowed an additional two multisig accounts, 10 subaccounts, which are additional addresses within wallets to group payments, etc, unlimited hot wallet funds, and unlimited importation of private keys. Paid users also are sent a free debit card, which can be used at CoinKite's payment terminals.

The professional, business and enterprise accounts are geared towards merchants of various sizes who are utilizing CoinKite's payment terminals, although the professional account could be useful for individuals paid from multiple sources in bitcoin who need different accounts for auditing and bookkeeping. Gradually larger amount of accounts and payment terminal links are offered, along with a host of additional features.

Mobile

While they have not yet released an app, CoinKite is responsively designed, and all functionalities are available through any handheld device. 

Bottom line

CoinKite's user-friendly product offers instant access to funds with bank grade security. The flexible multisignature wallet is one of a kind, and the HSM storage units find a great balance between access and security. Indeed, CoinKite has begun selling HSM units to bitcoin companies who at times struggle to juggle supply between hot and cold wallets.

For individual accounts, they bring needed innovation in security to the bitcoin industry, and this is worth shelling over a few extra bucks for an account upgrade. For merchants, their enterprise solution, offering both point of sale hardware and a robust reporting and accounting backend, is arguably the best in the market.