The first decentralized digital currency in the world, Bitcoin, has recently attracted the attention of the general public. However, as more people begin to use Bitcoin, the threat of theft becomes increasingly real. One core developer of the Bitcoin ecosystem, Jameson Lopp, has proposed a solution that, technically speaking, could put an end to Bitcoin theft once and for all: vaults.
I've just published a paper with a new proposal for how to construct vaults in Bitcoin, OP_VAULT. I think vaults are maybe the single most impactful change we could make to Bitcoin to help derisk custody at any scale. https://t.co/7drmhLL3XS pic.twitter.com/tOlBAbfIOt
— James O'Beirne (@jamesob) January 9, 2023
A vault is a type of multi-signature wallet that makes it much more difficult for hackers to steal your bitcoin. The wallet works by requiring multiple signatures for a transaction to be made. For example, if you have a “two-of-three signature vault,” then two out of three parties must sign off on a transaction before it can be made. This means that even if one party’s private key is compromised, the funds will still be safe.
The process of setting up a vault is relatively simple. The first step is to create a multi-signature wallet. Once the wallet is set up, you will need to add signatures. The number of signatures required will depend on the specific vault you are using. Once the vault is configured, you can start using it to store your bitcoin.
Additionally, vaults can be used to set up automatic spending limits or to establish a “blacklist” of addresses to that transactions can’t be sent. This means that you have full control over the transactions and complete visibility over the transactions taking place.
The idea behind vaults is that they make it much more difficult for hackers to steal your bitcoin. The difficulty of stealing money increases with the number of signatures needed for a transaction. Additionally, vaults can be set up so that transactions require multiple signatures in quick succession, making it even more difficult for hackers to steal your funds.
The vault approach, according to Jameson Lopp, can even be implemented in other ecosystems, and not just Bitcoin. It’s a concept, not a specific implementation. However, Gnosis Safe already has a similar approach for users of EVM networks.
Hacks are unforeseen events that must be curtailed if cryptography must remain a viable option for the safety of users’ funds outside banks. Thus the need for Vaults, a multi-signature wallet that makes it much more difficult for hackers to steal your bitcoin. It requires multiple signatures for a transaction to be made, and it can be set up to automatically limit spending and establish a “blacklist” of addresses to that transactions can’t be sent. With Vaults, individuals and institutions can rest easy knowing that their funds are safe from potential hackers.