What Is MultiSig? - Safe Haven

What is multisig?

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Multisig (or multisignature) means that you need to have several people’s (digital) signature to authorize a single transaction on the blockchain.

By default you only need one signature to complete a transaction. That is when you manage your own private wallet.

For companies or organizations it’s different.

For them it can be very smart to decentralize the management of the company’s funds and use a multisig wallet.

Doing otherwise would be very irresponsible and is waiting for a disaster to happen.

Multiple signatures for authorizing a transaction

As an owner of cryptocurrencies you are responsible for securing your own wallet.

There are no bankers or other intermediaries you should count on.

This means you also need to think about securing your own wallet.

The basic idea is to treat your crypto the same way you treat money or other valuable stuff.

If you leave these lying around, there is a good chance someone steals it.

And even if you keep stuff in a safe there’s still a chance someone could get access.

In the end, all you need to open a safe is one code, right?

Same goes for cryptocurrencies. (And setting up a trustless digital inheritance plan for example).

Cheating and breaking rules becomes very difficult if you add multiple layers of security and validation.

So if you have to sign transactions with multiple people then you’re going to automatically have these multiple extra layers of security already.

Multisig is a technical name for the case where multiple people have to give their authorization to trigger the execution of a single specific action. Multisig wallets are a common thing in crypto.

Why use multisig?

  • Build in an additional security mechanism
  • Share the responsibility of owning, managing and transacting digital assets
  • Avoid centralizing management
  • Avoid a single point of failure (but of course always make backups!)
  • Not dependent on one person
  • Avoid impulsive decisions
  • Harder for hackers to break into your wallet
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