1. Home
2. Cryptocurrency Day Trading

Crypto Vaults

Written By

Jemma Grist

Written By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

» Jemma Grist Profile Page

Edited By

Tobias Robinson

Edited By

Tobias Robinson

Tobias is a partner at DayTrading.com, director of a UK limited company and active trader. He has over 25 years of experience in the financial industry and contributed via CySec to the regulatory response to digital options and CFD trading in Europe. Toby’s expertise and dedication to financial education make him a trusted voice in the industry, including a BBC investigation into digital options.

» Tobias Robinson Profile Page

Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

» William Berg Profile Page

Updated

Jul 24, 2024

Crypto vaults are a cryptocurrency storage solution that provides an additional layer of security to digital wallets, ensuring assets like Bitcoin are secure. In this review, we discuss how crypto vaults work, their advantages, disadvantages and how to select the top crypto vault provider.

Crypto Vaults Explained

How Crypto Vaults Work

Crypto vaults are a safe storage service that applies a withdrawal delay and approval process to improve cryptocurrency security.

Owners of crypto vaults are notified of intended transactions and must approve them before payments are completed, which provides an additional security layer versus traditional crypto wallets. Additional approvers can be added if desired, to further protect funds. Other constraints such as transaction limits can also be configured for individual vaults.

Within the delay period, which is often a couple of days, vault owners also have the option to cancel a transaction.

Depending on the provider, crypto vaults can be used to store a range of cryptos; most commonly Bitcoin and Ethereum. As vaults prevent tokens from being immediately withdrawn, they are a good option for traders who do not want access to their Bitcoin or altcoins for long periods of time.

Crypto Vaults Vs Crypto Wallets

Like a wallet, crypto vaults have unique addresses that are used to send currency like Bitcoin. However, with a crypto wallet, the funds become accessible if someone has access to the private key. As vaults are not connected to the network, if the account linked to the vault is hacked, the hacker still doesn’t have access to the funds themselves.

While cold hardware wallets are often used as a higher security way to store Bitcoin and altcoins, owners will lose their funds forever if the private key is lost. Crypto vaults may be a better solution for those who do not trust themselves to look after a cold hardware wallet such as a USB.

Crypto Vaults Vs Bitcoin Vault

Crypto vaults are a safe storage solution that provides an additional layer of protection versus wallets, while Bitcoin Vault (BTCV) is a highly secure cryptocurrency that relies on mining. Bitcoin Vault uses a 3-key security solution to allow transactions to be reversed within 24 hours to provide better protection of assets, comparable to the transaction reversal process allowed using vaults.

While Bitcoin Vault initially saw high growth, the value of BTCV versus the US dollar has dropped significantly in the past year, according to price charts, and currently has a low market capitalisation ranking.

Pros Of Crypto Vaults

• Crypto vaults are more secure than crypto wallets due to the approval process and ability to cancel transactions
• The withdrawal delay makes crypto vaults a good option for investors looking to HODL Bitcoin and other cryptos for long periods of time, removing the possibility of making rash trading decisions
• Owners of vaults have the option to cancel transactions within the delay period
• Several-step-authentication makes it much harder for hackers to gain access to funds

Cons Of Crypto Vaults

• Cryptocurrency is not easily accessible when using vaults, preventing owners from quickly using or selling their assets, even in times of high volatility

How To Compare Crypto Vaults

When selecting the top crypto vaults, there are several aspects to consider.

Fees

There are often no fees associated with HODLing crypto in vaults, including on Coinbase and Bitcoin Suisse. However, there are usually fees when purchasing the crypto before storing it in the vault, which may be a percentage or flat transaction fee.

Registration

Some providers offer crypto vaults to customers who already have a crypto wallet. With Coinbase, no additional registration is required to set up a vault. However, make sure to check which countries customers are accepted from. While Coinbase accepts customer registration from the UK, Republic of Ireland (ROI), Switzerland, Uruguay, Zambia, Kenya, Kazakhstan and South Africa, traders from Egypt and Japan will not be able to open a crypto vault to store Bitcoin or altcoin.

Security

Each vault provider will use a different approval process to make funds more secure. In particular, check the delay time applied to withdrawals, as well as the approval process. Although these may be fixed, some providers may give the option to configure these at setup.

Though some providers, such as the bank Revolut, provide a “vault” service that allows customers to save small amounts using cryptocurrency, it does not offer the crypto vault security layer and is therefore not a legitimate crypto vault.

Access

Access requirements and time will vary depending on the crypto vault host. With Coinbase, there is a withdrawal delay time of 48 hours. This begins once a withdrawal has been requested and confirmed via email. For security reasons, there is no way to bypass this delay.

Final Word On Crypto Vaults

Crypto vaults provide a high-security way to store Bitcoin and altcoins by using an additional security and verification layer compared to traditional crypto wallets. Though this means that assets are safer, they also become less accessible. A hybrid approach of storing funds in both crypto wallets and vaults may be the best way to ensure easy access to some funds while keeping longer-term savings safe.

FAQs

What Is a Crypto Vault?

Crypto vaults are a cryptocurrency storage solution that applies a transaction approval process and does not allow funds to be withdrawn immediately. This provides a higher level of security than traditional crypto wallets.

How Do Crypto Vaults Work?

Crypto vaults are configured with either one or more approvers, who must validate all transactions before they are completed. Additionally, a delay period prevents funds from being withdrawn immediately, while also allowing transactions to be cancelled within this time.

What Is The Difference Between Crypto Vaults Vs Bitcoin Vault?

Crypto vaults are a safe storage solution for cryptocurrency, unlike Bitcoin Vault (BTCV), which is a cryptocurrency itself. Like vaults, BTCV allows transactions to be reversed within a defined time period.

What Are The Advantages Of Crypto Vaults?

Vaults are more secure than crypto wallets, thanks to their approval process. The withdrawal delay also makes vaults a good option for long term investors of Bitcoin and other cryptocurrencies.

What Is The Difference Between Crypto Vaults And Crypto Wallets?

A crypto wallet is accessible simply by knowing the private key. With crypto vaults, even if the account is hacked, the hacker will not have access to the funds without the required approvals.