How do Multisig Wallets work
Multisig (multisignature) wallets require multiple private keys to authorize transactions, distributing control across several users. This setup offers more security than traditional wallets controlled by a single key holder.
Types of Multisig Wallets:
- 1-of-2 Signatures: Either of the two key holders can approve transactions independently.
- 2-of-3 Signatures:Requires two out of three keys, offering flexibility and added security.
- 3-of-5 Signatures: Four offline keys and one with a security provider; two offline keys needed for access.
Pros:
- Security: Reduces risk by spreading control across multiple key holders.
- Transparency: Open-source contracts ensure auditability.
- Flexibility: Contracts can be customized to meet changing needs.
Cons:
- Complex Setup: May require technical know-how.
- Legal Issues: Disputes among key holders can lock funds.
- Higher Fees: Multiple signatures increase transaction costs.
Use Cases:
■ Escrow Protection:Ensures secure transactions with a 2-of-3 wallet setup.
■ DeFi Projects:Facilitates decentralized, collective decision-making.
■ Collaborative Ownership: Safeguards shared crypto assets with consensus-based approvals.
To Create a Multisig Wallet choose co-signers, set the required number of signatures, and share the master public key with all participants. Once co-signers are added, transactions will require approvals from the designated number of key holders.
Multisig wallets are ideal for teams and organizations, off
