Cryptionary

Multi Signature

Multisig

1. concept

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.

1.1

"A company might use a multisig wallet for their treasury, requiring signatures from the CEO, CFO, and COO to authorize large transactions."

2. security

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.

2.1

"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."

3. flexibility

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.

3.1

"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."

4. use-cases

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.

4.1

"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.

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