A Multi Signature (Multisig) wallet is a type of digital wallet that requires signatures from multiple private keys to authorize transactions. This setup enhances security and provides a method for shared control over funds.
"A company might use a multisig wallet for their treasury, requiring signatures from the CEO, CFO, and COO to authorize large transactions."
Multisig wallets are a safe way to hold shared funds as multiple private keys - usually controlled by separate entities - must be combined to authorize transactions. This setup can protect against theft, loss, or misuse of funds.
"If one person loses their private key in a 2-of-3 multisig wallet setup, the funds can still be accessed using the other two keys."
Different types of multisig wallets can be generated to require all the keys, or a specific number (like 2 out of 3, or 3 out of 5) of the keys to authorize transactions. This provides flexibility in managing access to the funds.
"In a 2-of-3 multisig wallet, any two of the three private keys can authorize a transaction. This setup can provide a balance of security and convenience."
Multisig wallets are useful in various scenarios, such as shared control over funds in a company, enhanced personal security measures, or even in creating a more secure environment for a cryptocurrency exchange's cold storage.
"Cryptocurrency exchanges often use multisig wallets for their cold storage to enhance security. Even if one key is compromised, the funds remain secure."
* All terms and definitions may update as the Cryptionary improves.