All you need to know about Multisig Wallet
Tags: Multisig Wallet, Crypto, Multisig, Wallet, Cryptocurrency

Every time you transfer funds from your wallet — a transaction is created and it is signed. This signature basically resembles that your transaction is consent, conducted, and approved by you. A single signature crypto wallet signifies one signature to sign the transaction while a multisig which is an abbreviation for multi-signature refers to the requirement of more than one signature to sign a transaction.

A multisig wallet is a wallet that is shared by two or more than two users and they are called “Copayers”.

How does it work?

The transaction requires signatures that would be lower or equal as to the number of wallet’s copayers as it depends on the type and kind of wallet. Basically, all types and kinds of multi-signature wallet require M-of-N signatures.

For instance,

2–3 multisig wallet is shared by 3 copayers but would require 2 signatures to sign the transaction. 3–3 multisig is shared by 3 copayers and requires signatures of all the 3 users to sign the transaction.

In a simple term, if Chandler and Joey own a secure deposit box that has two locks and two keys, wherein each of the two key is owned by both of them. Hence, to open and use the box, it will require both the keys, meaning if Chandler needed to use the box, he cannot just use his key but would also require Joey’s key to open the box.

When a copayer initiates or conducts a transaction, a transaction proposal is created by the wallet and thus, requires the signature of the copayer who initiated the transaction. However, while sending the transaction it will also require the signature of the required number of copayers. Unless all the required number of copayers sign, the transaction is withheld and only occurs or is completed when the transaction is approved by all the required number of copayers. Post the signing, the transaction is broadcasted to the network and the funds are sent and hence, the transaction is completed.

The transaction proposal does not consist of a time period for approval with the signatures of the requires the number of copayers and any copayer can initiate or conduct the transaction. All the copayers in the account can see the shared wallet’s funds and transactions.

A unique recovery phrase is applicable for each user of the wallet, and in case if any of the copayer loses the recovery phrase then it will lead to unable of spending the wallet’s fund as there wouldn’t be enough copayers to sign the transaction.

A multisig wallet brings a lot of safety and security to the funds and consists of making trustless escrow.

Also Read, Know The Right Way To Store Your Crypto!

Red Flags to consider

Purchasing of cryptocurrencies needs diligence as few offers that can be a scam would likely have ‘too good to be true’ price. The attackers can move the fund to a wallet that the victim may not have access to. It is important to safeguard and not lose the recovery phrase. When purchasing a cryptocurrency, it is ideal to receive the fund in a wallet that only you own than using a multisig wallet.

Multisig Wallet

Electrum: Electrum is a lightweight, fast, secure, and a popular Bitcoin wallet. It was created in the year 2011 by Thomas Voegtlin and ever since various developers have made its contribution to the wallet.

Website: https://electrum.org/#home

2. Armory: Armory is the only open-source wallet with cold storage and it also supports multi-signature. It enables the users to create multisig addresses with its feature of Lockboxes.

Website: https://www.bitcoinarmory.com/

3. Copay: Copay is a secure platform for Bitcoin and Bitcoin Cash wallet that can be utilized on desktop and mobile devices by BitPay.

Website: https://github.com/bitpay/copay

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