Multi-signature wallets and their benefits

by in Crypto 101, Cryptocurrency For Beginners

Multisig wallet

Technologies don’t stay still, and innovations are appearing every day. One of those modern tools we want you to be acquainted with is multisig wallet. Multisig is a unique type of digital signature which allows two or a higher number of users to approve accounts acting as an organization. It’s conceivable because technology combines numerous individual signatures in it.

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For learning the basics about crypto wallets: Everything you need to know about crypto wallets

How does this technology work?

Let’s suppose that there’s a lock with 2 keys, one of them is yours and the second is your friend's. The lock opens solely with the two keys together, which indicates that you won’t be capable of unlocking it without your friend, so does he.

A similar thing occurs with a multi-signature wallet. You'll have an opportunity to make modifications in the multisig address exclusively if the rest of the members have presented their signatures. This implies that the ones who apply multisig technologies automatically add a sheltering layer to their capitals.

Popular multisig wallets

Nowadays, many various platforms have attached multi-signature features to their projects. And some of them became very successful in this sphere.

1. Electrum

In the Electrum wallet, you can store just Bitcoin. It is stuffed with useful characteristics but is not user-friendly. This wallet will suit experienced Bitcoiners and the ones, who know the basic terms of it.

The best thing in Electrum is that it is extremely protected and can encrypt the private key on your hard drive. Also, you can custom transaction fees while using this wallet.

Presently, you can find this wallet on Mac OS, Linux, Windows, and Android.

2. Armory

Armory is a desktop wallet. It is an HD BTC wallet, which lets users regulate their private keys without the need for third-party services. It supports multi-signature technology and is a cold storage open-source wallet. Armory enables building multisig addresses applying its Lockboxes feature and presents up to 7-of-7 authorizers for Bitcoin transaction’s sign.

Presently Armory is available on Linux, Mac OS, and Windows.

Exchanges or stakeholder groups mostly prefer this wallet.

3. Coinbase

Probably, you've already heard about the hosted Bitcoin wallet Coinbase. The term “hosted” indicates that Coinbase manages your private keys on your support. But not all users know that Coinbase additionally provides a non-hosed multi-signature wallet, so you can control your private keys.

This wallet uses a 3-key architecture for giving a user the administration of the capitals. These 3 keys include the Coinbase key, user key, and shared key. The wallet presents 3-of-3 authorizers to sign a Bitcoin transaction.

Coinbase is a Web wallet so you can sign in from any gadget you want.

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4. BitGo

BitGo is a multisig wallet which began its activity in 2013. BitGo is the most authoritative Bitcoin wallets and API services, and it powers several exchanges BitBay, Bitfinex, Kraken, and so on. This wallet provides 3-of-3 authorizers to sign a Bitcoin transaction.

Presently, this wallet is available on Windows, Mac OS, Linux, Chrome Extension, iOS, and Android.

5. Copay

Copay is not only a multisig but also a multiplatform wallet, which supports Bitcoin and Bitcoin Cash. It is a secure wallet for both desktop and mobile devices. Copay provides multiple wallet creation and in-app management.

Find the wallet on Windows, Linux, Mac OS, iOS, and Android. Also, you can install a Chrome Extension of Copay.

High level of protection

These wallets prevent users from facing any serious problems like capital losses when they're losing the individual keys. Even if you miss 1 of the keys, the multisig technology is still going to have your stocks defended.

If you have 3 keys and accidentally miss one of them, you’ll yet have admittance to the wallet, because in this case, you are still the majority. And if someone has hijacked your key, he won’t have the opportunity of making changes in your account with a single key.

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Also, there’s an option of performing a multi-signature wallet, which claims 2 keys, and it’s known as two-factor authentication. This suggests you save one of the individual keys on the laptop and the second on your mobile phone. So, you’ll have entrance to the wallet if you give two of them.

A thing that's important to keep in mind is that if you apply two-factor authentication and miss one of the keys, you won’t have an opportunity to sign in to your account. That’s why it’s profoundly recommended to use a 2-of-3 setup or a 2FA third-party service.

Bussines industry and multisig wallets

This innovation has its benefits in the sphere of business. It may help entrepreneurs in the decision-making process. If a chief sets up a 5-of-7 account where each board user has a single key, the exclusive decisions that will be performed are going to be those that are accepted by the bulk.

Multi-signature options have already been attached to multiple apps and platforms and made various crypto coins like BTC extra beneficial and engaging. This is becoming more evident in the business field. They've also increased the level of stability and safety, which is very attractive for those who practice hodling.