Multisig, or Multi-signature, is a wallet configuration that needs a minimum of two keys to authorize a transaction. Commonly used by crypto exchanges to make sure that the funds can’t be moved by a rogue, Multisig has applications for the end-users.
If you are looking to enhance the security of your non-custodial bitcoin wallet, then multi-signature may be the answer for you.
Perfect Custody Solution
There’s nothing like a perfect bitcoin wallet. Hardware wallets can be opened under duress. Paper wallets can wither. Mobile wallets can disappear. And, then there are custodial wallets, that are not more than an exchange hack or exit scam away from getting drained.
But, there’s one solution which combines some of the best elements of custodial as well as non-custodial wallets – Multisig Wallet.
A multisig wallet requires a minimum of two key signatures for authorizing a transaction, which means that you will need to trust another party. Different from storing funds on an exchange, though, you have to choose the identity of the 3rd party, and even if that keyholder need to hoodwink you, they won’t be able to access your funds.
P2SH is the address standard which is commonly used for Bitcoin multi-signature wallets. Many wallet providers support this standard, a lot of whom provide detailed information on how to use their software for setting up a multisig wallet.
Before getting started, you will wish to consider how many keys you want to authorize. There are numerous permutations available, ranging from one of two, in which either party can sign the transactions, to the more common two of three, which is popular with escrow-based services like LocalBitcoins, and three of five, which is commonly used by exchanges to secure their hot and cold wallets.
The most popular desktop wallet for bitcoin, Electrum is a trusted and feature-rich open source wallet that’s been around for years.
Electrum supports the integration of hardware wallets like Trezor and Ledger and offers a clear tutorial on how to create two of two multisig wallet.
The Electron Cash wallet by Jonald Fyookball is a fork of Electrum which also offers two of two multisig options for bitcoin cash users.
Armory is an open source Bitcoin wallet for more advanced users. It supports up to seven of seven multi-signatures. It is ideal to set up a multisig wallet, where funds are likely to be put in cold storage for a long time.
For those who like the idea of multisig, but they’re not confident with the technical elements of it, there’s another option – outsource the task altogether.
Casa provides Keymaster, which is a multisig service that entrusts one of the keys to Casa themselves. Their “Sovereignty-as-a-Service” offering comes with a price that starts at $300 per year for 3-of-3 multisig, rising to $1,800 a year for 3-of-5.
There are many other wallet providers which support multisig for Bitcoin, Bitcoin Cash and other leading cryptocurrencies. Do your research, determine your preferred M-of-N signatures and then select your fellow keyholders wisely.