A good bitcoin wallet does many things: it is secure, easy to use, and facilitates spending of bitcoin across a growing number of platforms and merchants.
This sounds simple enough. Yet as we worked on the Coinbase wallet, we often found these goals to be in conflict with each other.
Consider the following two goals:
- Ease of Use: Low friction spending is key to more bitcoin adoption. Bitcoin is already much simpler than entering a credit card online, but whenever we require a verification step involving your phone or a link in your email, it adds a bit of friction to the process.
- Security: At the same time, the bitcoin world has seen attacks from cyber criminals increase. By making sending bitcoin easy, it makes a bitcoin wallet an easier target for nefarious attackers.
Compounding the issue, bitcoin is still an investment for many customers. For them, their #1 goal is to never lose bitcoin. In fact, they would appreciate more friction in the sending process to ensure their bitcoin is safe.
How do we reconcile these two goals? After many designs iterations, we are proud to announce a new account type on Coinbase: The Vault.
Introducing The Vault
The Vault is a second account type designed for storing large amounts of bitcoin with higher security on Coinbase.
Starting today, you can create as many wallets or vaults as you’d like under one user account. They will show up in the sidebar when you sign in to Coinbase.
What is the difference between a wallet and a vault?
A wallet makes sense for day-to-day spending. Think about it like the cash that you carry in your pocket: It is very convenient for daily spending, but you wouldn’t take your life savings with you everywhere you went.
The vault, on the other hand, can be treated like a savings account. Withdrawals are infrequent and have additional verification steps making them slower, with increased security.
We recommend you store smaller amounts of bitcoin in your wallet for convenient spending (including connecting mobile apps), while using vaults for larger amounts of bitcoin and investment purposes.
What security does the vault offer?
Some security options the vault provides include:
- Time delayed withdrawals: You can add a 48 hour delay to all vault withdrawals. During this period we will contact you using various communication channels to ensure you are the one who has approved the withdrawal.
- Multiple approvers: Individuals and organizations can now jointly create vault accounts, with some combination of approvers (say 2 of 3, or 3 of 5) required to initiate a withdrawal. This greatly improves security since it requires multiple people to approve a withdrawal before it will be processed.
- Offline Storage: Our vault uses the same cold storage technology that is used by 1.4M Coinbase customers today. This keeps up to 97% of bitcoin stored entirely offline, disconnected from the internet, in a geographically distributed set of private vaults and safe deposit boxes.
“Multi-sig” technology for The Vault – Coming Soon
To complete the Coinbase Vault offering, we will be adding multi-signature (“multi-sig”) technology in the coming weeks to enable customers to manage their own vault security. The first iteration of the vault we completed uses the battle-tested offline storage technology we have in use today. We will release our multi-sig vault approach as well once it has been appropriately vetted by security teams both internally at Coinbase and externally.
What is the cost of using a Coinbase vault?
Coinbase vaults are free to use (just like our wallet product). Coinbase only charges a fee (1% or less based on volume) when customers buy or sell bitcoin, converting it to their local currency.
When will the vault be available?
We are rolling out the vault to 5% of customers today, with a general availability release targeted for July 16th.
Finally, here are some more screenshots of the vault in action. We hope you find it useful: