You hold the private keys to your bitcoins (BTC) and therefore have the option of spending your funds as you see fit or keeping them for your heirs. Multisig feature adds an extra layer of security since multiple people need to approve transactions. It is absolutely necessary for a company, it may be interesting for an individual who has significant funds. Be careful, however, to choose the co-signers carefully.
What is a multisig wallet?
You have therefore opted for a solution non-custodialyou know the motto: “ not your keys, not your bitcoins “. Happy holder of your cryptos, you have escaped all bankruptcies and exit scams. But being your own crypto-banker is a responsibility that should not be taken lightly. THE multisig wallet is a shared wallet whose funds can only be spent with the approval of other co-signers.
Why use a multisig wallet?
For a company, it’s quite obvious: the rigorous management of funds requires multisig wallets which avoids embezzlement. Or at least reduces the risks.
For an individual, this may be an option in various scenarios (if you want to add a layer of security, adding a passphrase seems simpler):
- If you have a lot of funds to secure (but we will see that the additional passphrase is probably a better option).
- If you are a compulsive shopper/gambler, a multisig wallet will allow you to manage your impulses (on the other hand, you will have to find a solution for your fiats…).
- If you want to let your heirs fend for themselves (If they hate each other, it will be complicated)
Backing up multisig configurations
Each multi-signer must not only secure their private keys or seed, but also additional metadata: extended public keys (xpub) of all co-signers, threshold used, derivation path and script type. All co-signers must know the password called “master public key” to access a shared multisig wallet.
Spend funds
The trickiest part of signing multisig transactions is not the signing itself, but verifying all the xpubs of the co-signers. Some hardware wallets like the BitBox02 allow you to store all the relevant information about your co-signers in order to avoid any errors. Sending and receiving operations are systematically checked. It is important to note that crypto companies offering hardware wallets are constantly improving the features to make it easier for users.
Multisig wallets more suitable for businesses
THE multisig wallets have the disadvantages of their advantages. Highly secure, they are difficult to hack. But are therefore less easily accessible to legitimate owners.
- It is necessary to create a new wallet in the event of the departure of a partner.
- The partners co-signing a multisig wallet depend on each other to manage the funds: in the event of disagreement, the smooth running of the company can be jeopardized.
- Transactions take longer and fees are higher.
Learning how to secure your bitcoins (BTC) is vital. It must be done in stages (by following the free training of ” discover bitcoin ” for example): understand the importance of its mnemonic phrase (the words BIP39), take control of a hardware wallet or even know how to use a hot wallet. A simple error and it is the total loss of your funds. The multisig wallet is a more complex tool than the single sig. IIt is more suitable for companies that will know how to get support if necessary. On the other hand, an individual can very easily add additional security to his wallet thanks to a passphrase and even create a “decoy” wallet. This is what I invite you to understand in another article.
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