What is Multi-Signature (Multisig)?
Multi-Signature, commonly abbreviated as Multisig, is a security method used in cryptocurrency transactions that requires two or more private keys to approve a single transaction. Unlike standard single-signature transactions, where one key holder has sole authority, Multisig transactions require a designated number of signatures from different key holders, adding an extra layer of security and accountability.
Multisig wallets are commonly used by organizations, families, and partnerships, where funds are collectively managed. For instance, in a “2-of-3” Multisig wallet, three individuals are assigned private keys, but only two of the three must sign to complete a transaction. This setup helps prevent unauthorized access to funds and mitigates the risk of losing access if a single private key is compromised or lost.
This method also enhances security in personal use cases, where a single person can distribute keys across multiple devices or trusted individuals. Multisig is valuable for estate planning, business transactions, and joint financial operations within the cryptocurrency space. While this process is effective in securing assets, it also requires additional management and coordination to ensure that all designated key holders are able to participate when needed.
