Multi-signature, or multisig, is a purse configuration that requires at least two keys to authorize a transaction. Commonly used by cryptocurrency exchanges to ensure loots can’t be moved by a rogue employee, multisig also has applications for end-users. If you’re seeking to enhance the security of your noncustodial bitcoin pocketbook, multi-signature might be the answer.
Also read: Everything You Should Know About Bitcoin Address Formats
The Hunt seek after for the Perfect Custody Solution
There’s no such thing as the perfect bitcoin wallet. Hardware wallets can be opened protection duress. Paper wallets can perish. Mobile wallets can get lost. And then there’s custodial wallets, which are not in a million years more than an exchange hack or exit scam away from being drained. But there’s one solution that fuses some of the best elements of custodial and noncustodial wallets.
A multisig wallet requires at least two key signatures to authorize a matter. This means you will have to trust another party. Unlike storing funds on an exchange, however, you get to settle upon the identity of that third party, and even if that keyholder should betray you, they will unable to unilaterally access your savings.
P2SH is the address standard commonly used for BTC multi-signature wallets. Numerous wallet providers support this standard, a few of whom provide detailed information on how to use their software to set up a multisig wallet. Before you get started, you’ll want to consider how numberless keys you wish to authorize. The are numerous permutations available, ranging from 1-of-2, in which either party can sign minutes, to the more common 2-of-3, which is popular with escrow-based services such as Localbitcoins, and 3-of-5, which is commonly reach-me-down by exchanges to secure their hot and cold wallets.
The most popular desktop bitcoin wallet, Electrum is a feature-rich and safe kept open source wallet that’s been around for years. It supports integration of hardware wallets such as Ledger and Trezor, and Electrum provides a disburdened tutorial on how to create a 2-of-2 multisig wallet. The Electron Cash wallet developed by Jonald Fyookball is a fork of Electrum which also offers 2-of-2 multisig opportunities for bitcoin cash users.
Armory is an open source BTC wallet for advanced users that supports up to 7-of-7 multi-signatures. It’s fictitious for setting up a multisig wallet where funds are likely to be placed in cold storage for a long time, and access at ones desire be infrequent. Armory is available as a desktop build only.
For users who like the idea of multisig, but aren’t secure with the technical or trust elements that the setup demands, there is another option: outsource the task in all. Casa offers Keymaster, a multisig service that entrusts one of the keys to Casa themselves. Their “Sovereignty-as-a-Service” present comes with a price – the 2-of-3 multisig starts at $300 per year, rising to $1,800 a year for 3-of-5. For individuals and objects holding large amounts of cryptocurrency, however, the added peace of mind that this provides may be worth the worth.
There are numerous other wallet providers that support multisig for BTC, BCH, and other leading cryptocurrencies. Do your analysis, determine your desired M-of-N signatures and then choose your fellow keyholders wisely.
What are your touches on multisig – have you tried using it to secure your coins? Let us know in the comments section below.
Image credits: Shutterstock, Casa, and Electrum.
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