A multisig (multi-signature) wallet is a digital crypto wallet that requires multiple private keys (signatures) from different people or devices to authorize a transaction, acting like a shared digital safe needing several keys to open
This setup enhances security by eliminating single points of failure, preventing theft if one key is compromised, and is ideal for shared funds or corporate treasuries, requiring a pre-set number of approvals (e.g., 2 of 3 keys) before funds can be moved.
How it works
- Multiple Keys: Instead of one private key, a multisig wallet uses several, held by different parties or on different devices.
- Threshold System: You set a threshold, like "2-of-3," meaning any two of the three keys must sign to approve a transaction.
- Enhanced Security: If a single key is lost or stolen, funds remain safe because the thief can't meet the signature requirement.
Key benefits
- Superior Security: Prevents unauthorized access, even if one key is compromised, making it much safer for large holdings.
- Shared Control: Perfect for businesses, DAOs, or families to manage joint funds, ensuring no single person has unilateral control.
- Redundancy: A user can lose one key (e.g., a phone) but still access funds with another key, as shown in this YouTube video, according to this YouTube video.
Who uses it
- Businesses and crypto projects
- Decentralized Autonomous Organizations (DAOs)
- Individuals with significant crypto assets seeking maximum security
