Multisig wallets have come into general use in the crypto industry. The concept existed long before the advent of crypto. Multisig literally means ‘multisignature’. This technology is used as a means of advanced security for the assets on the wallet. Read on to learn how to use Multisig and what it is good for.
Definition
Multisig technology is utilized as a special type of digital signature. It allows several people to sign different kinds of documents together as a group. This technology was first used in the crypto industry in 2012, leading to the creation of special multisignature wallets. Multisig is mainly used for the advanced security of assets.
Here’s a simple example, the one from the real world. Two chummies decided to buy something precious. In order to store this valuable item, they purchased a safe with two locks. They shared the keys and then, to open the safe, they have to do it together.
When it comes to digital segment, it’s all the same — two or more signatures can be used to access a Multisig wallet.
Standard keys and multisignatures
Typically, digital assets are stored at a standard address with a single key. Funds can be kept on the exchange or in a separate wallet. It turns out that whoever has access to both the key and the wallet can make transactions on their own, without anyone logged in. This implies that if a malicious user gets access to the key, there is nothing to prevent him from taking possession of all the funds.
Possessing a single key is, of course, more convenient and easier than a multi-signature wallet, but it still creates a number of security problems, an example of which we gave above.
Besides, a standard single-key address would not work for companies that deal with digital assets. If all of the company’s assets are stored at the same address with a single key, it will mean that it is held by one person or even a group of people. This is not the safest option.
That is when Multisig wallets come to the rescue, solving these problems. Multisignature addresses have a great variety of combinations. The most common one is 2-of-3. It goes to show that only two keys out of three are needed to access the funds. However, there are other variations – 2-of-2, 3-of-3, 4-of-5, etc.
Advanced security
Users who manipulate Multisig wallet prevent problems with the loss or theft of the private key.
Consider this example: you decide to create a 2-of-3 multisig wallet, and then you decide to keep your keys in different places: in your laptop, on your phone and on a piece of paper. Even if an intruder manages to gain access to one of the devices, or if you yourself lose one of the keys, there will be nothing to worry about. Similarly, phishing attacks and malware infections are less likely to succeed because the hacker is likely to gain access to only one device and key.
Decision-making
Directors of any company can use multisig wallet to control access to funds. For instance, if they decide to install a 4-of-6 wallet, six keys are given to each director. No individual director can misuse funds. Therefore, only those decisions that are agreed upon by the majority are made.
Drawbacks
Despite all the strengths of Multisig wallet, it also has weaknesses. To cite one example, there is a story about five entrepreneurs from China who decided to invest in bitcoin. Their investment was long-term, so they used the multisig wallet. Each of the entrepreneurs had their own key to the wallet. They chose the 5-of-5 combination, which means you need all the keys to access the wallet. The story ended with one of the entrepreneurs dying suddenly of a heart attack a few years after investing. Since no one knew where the key of the breathless entrepreneur was kept, access to the wallet was lost forever.
Conclusion
Multisignature is a good solution for those who store large amounts of cryptocurrency and want to protect themselves from cybercriminals. Moreover, this technology is worthwhile for companies to ensure that its funds are used only by mutual agreement of all directors.
But in order to start earning cryptocurrency today, we suggest using RevenueBOT, a platform for creating trading bots. You can use RevenueBOT to create a stable passive income. The platform allows you to create trading bots on the largest and top cryptocurrency exchanges such as: Binance, Bittrex, FTX, OKX and others. The creation of the bot is completely free, the commission fee will be charged by the platform only after the first profit has been made. It should be noted right away that the bot does not have access to the user’s funds on the exchange, and that it trades using API-keys, which means that the exchange account will remain inaccessible. RevenueBot has over 40,000 customers, who make money thanks to our trading bots.
The following is, however, not an exhaustive list of the advantages offered by our platform:
- The commission fee is charged only after the user has made a profit;
- The bot settings open up a variety of ways to make a profit;
- RevenueBot has a marketplace where customers can buy a ready-made bot so they don’t have to create their own, or they can also sell their own bot if its configuration has proven to be effective. Furthermore, users can acquire in the marketplace the services of a mentor (an experienced user of the platform), who is ready to answer questions from beginners. Over time, you can become a mentor yourself and earn an extra income from it.
- Regular updates of the platform’s features, which optimize the trading process.
- The RevenueBot referral program allows you to earn money without having to trade. Refer new clients to the platform and you will get up to 30% of the platform’s commission on all profitable transactions conducted by the new user attracted by you every month (but no more than 15 USD).
As you can see, the platform has quite a lot of advantages to offer, all you have to do is start trading. There is no need to list them all when you can check everything yourself through RevenueBot’s official website. Have a good trade!