Multisig (Multi-signature) is a type of wallet that requires more than one private-key to authorize a transaction. This creates an extra layer of security and is often used by businesses or groups to manage shared funds.

A Shared Lockbox for Your Crypto

To understand a multisig wallet, think of a corporate bank account that requires two or more signatures on a check before any money can be moved. A multisig wallet works the same way but with cryptographic signatures instead of handwritten ones.

A multisig wallet is typically set up as a [number]-of-[total] configuration, such as a "2-of-3" wallet. In this setup, three unique keys are created, but any two of them are required to approve a transaction. This prevents any single person from having unilateral control over the funds. Even if one key is lost or compromised, the wallet remains secure as long as the other key is available.

Why Multisig is a Core Security Measure

Multisig wallets are a powerful tool for preventing a single point of failure. They are especially useful for:

• Corporate Treasuries: Businesses can use multisig to ensure that no single executive can move the company's funds without approval from another.
• Family Accounts: A family can manage shared savings, with two out of three family members needed to authorize a transaction.
• DAOs: Many DAOs use multisig to manage their community treasuries, requiring a certain number of votes to authorize a disbursement of funds.

While a multisig wallet offers a higher degree of security than a standard wallet, it can be more complex to set up and manage. However, for those with significant assets or shared financial responsibilities, it is a crucial tool for mitigating risk and ensuring security.