{"id":7397,"date":"2022-04-25T00:15:00","date_gmt":"2022-04-25T08:15:00","guid":{"rendered":"https:\/\/www.cultofmoney.com\/?p=7397"},"modified":"2022-04-24T08:12:42","modified_gmt":"2022-04-24T16:12:42","slug":"multisig-wallets","status":"publish","type":"post","link":"https:\/\/www.cultofmoney.com\/multisig-wallets\/","title":{"rendered":"What Are Multisig Wallets (And How To Set One Up)"},"content":{"rendered":"

\"What<\/span><\/p>\n

A standard cryptocurrency wallet relies on a public address and a private key<\/a> to control funds. The public address is used to receive digital assets, and the private key lets you actually authorize transactions.<\/p>\n

But Multisig wallets support two or more private keys, so wallet control is shared between multiple parties. This offers additional security and prevents one party from controlling funds in a wallet.<\/p>\n

However, multisig wallets, short for multi-signature wallets, can be complicated. And they don\u2019t always make sense for the typical cryptocurrency user. <\/p>\n

Here\u2019s a closer look at how multisig wallets work, how to set one up, and when using one makes sense.<\/p>\n

What Is A Multisig Wallet?<\/h2>\n

A multisig wallet is a <\/strong>cryptocurrency wallet<\/strong><\/a> that requires two or more private keys to sign and authorize transactions<\/strong>. <\/strong><\/p>\n

<\/strong>If you\u2019ve ever seen a movie where two generals have to put in different keys simultaneously to launch a missile, the idea is somewhat similar. But instead of physical keys and rockets, multisig wallets use virtual keys and unlock the contents of crypto wallets for outgoing transactions.<\/p>\n

Multisig wallets exist because it’s often risky for a single entity to have control over a wallet if that wallet address has enormous amounts of crypto. By splitting control over a wallet across multiple keys, multisig wallets help increase security and remove the risk of a single point of failure.<\/p>\n

Mutisig wallets can work functionally in several ways as well. For example, a single private key may be split in two, requiring both halves of the key together to enter an outbound transaction.<\/p>\n

Others use more elaborate techniques where two or more wallets are used to unlock a third wallet, which holds the currency.<\/p>\n

When Should You Use A Multisig Wallet?<\/h2>\n

Multisig wallets are ideal for institutional cryptocurrency holders, like exchanges<\/a>, brokerages, investment firms, and family offices. In short, any entity that holds an immense amount of digital assets can benefit from using a multisig wallet.<\/p>\n

These are all situations where having two or more people controlling private keys makes sense. If you\u2019ve seen a business check that requires multiple signatures over a certain amount, multiple signature wallets offer similar financial protections.<\/p>\n

There are also several examples of times investors could have avoided a major security incident by using multisig wallets. Some of the most infamous cryptocurrency losses of all time resulting from a single point of failure include:<\/p>\n