You have Bitcoin wallets for everyday spending, and you have cold-storage for keeping money safe. I believe Coinbase has found a happy medium, with the scale tipping towards security rather convenience. Its a rather good announcement, as what any reputable wallet maker has to achieve are two very conflicting mindsets seen below:
Ease of Use
Wallet is easy to use, with an intuitive interface that allows sending and receiving money with as little friction or resistance to the process. This usually means no verification or loopholes to jump through, as well as settings being tucked into corners where they are hidden, if any. All this as it would hinder ease of use. Ease of use needs to be a priority as it’s essential to Bitcoin adoption. Copy and pasting an address and then hitting send is much more convenient than entering your credit card info. Any verification step or likewise added just adds more friction.
Security
Wallet must be secure, as anonymous currency has become a very attractive target for hackers, as Bitcoin is still in its infancy stages. The more people hear about a person losing Bitcoins the more it impacts Bitcoin adoption negatively. Adding verification steps and security features will help deter attackers, but it makes the actual process of sending and receiving Bitcoin much less fluid.
Coinbase also says that most people see Bitcoin as an investment as well, so not losing their Bitcoin is the top priority. With that being said, they believe they have come up with the perfect solution.
First thing to that comes to mind is “What’s the difference between a wallet and a vault?”. Good question. Again Coinbase has a very good analogy:
“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.”
That’s not to say all wallets are insecure by default, with Coinbase storing 97% off all Bitcoin in offline storage and across the world. The Armory is considered one of the most secure wallets you can use, making it a great contender for anyone that wants a security focused wallet.
But what a vault can offer is quite intriguing, and with the convenience of having them online so you can access on your computer or your android phone is also there too. On top of that, here is some features of a Vault:
- 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.
On top of this, they plan on incorporating multi-sig technology, which will just make the Vault a much more secure option when it comes to storing your Bitcoin.
I see the vault being a good option for small-time businesses, where there are only a couple of people responsible for managing the revenue the business makes. By making the required signers 3 of 5, a purchasing decision can be easily made.
For more information, visit: http://blog.coinbase.com/post/90552757447/the-future-of-bitcoin-storage-wallets-vaults
Photo Source:
http://siliconangle.com/blog/2011/07/05/safeguarding-the-cloud-where-does-mobile-go-from-here/vault-safe-cloud-security/
http://forexmagnates.com/whoa-coinbase-scores-5-million-investment-heavyweights-arriving/