Which statement best explains how Vault handles data encryption?

Comprehensive and Detailed in Depth Explanation:

Vault’s encryption mechanism is a core security feature. The HashiCorp Vault documentation states: "When a Vault server is started, it starts in a sealed state. In this state, Vault is configured to know where and how to access the physical storage, but doesn’t know how to decrypt any of it. Unsealing is the process of obtaining the plaintext root key necessary to read the decryption key to decrypt the data, allowing access to the Vault." It further explains: "Vault uses encryption to secure data at rest and in transit, using an encryption key protected by the root key."

The documentation details: "The data stored by Vault is encrypted using an encryption key in the keyring. This keyring is itself encrypted by the root key, which is protected by the unseal process (e.g., Shamir’s Secret Sharing or auto-unseal). Vault ensures data is encrypted both at rest in the storage backend and in transit over the network using TLS." Option B is false—the root key is never stored in plaintext. Option C is incorrect—data is encrypted at rest, not just in transit. Option D is wrong—Vault performs encryption internally, not via third-party services. Thus, A is correct.