How does a Multi-Signature Wallet Weave an Impregnable Security Layer
A multi-signature wallet (also known as multisig) allows transactions just like any other crypto wallet. The only difference is that a multisig wallet requires more than one authorized person to confirm the transaction to allow the exchange of funds.
Performing a transaction using crypto wallets consists of two steps — submitting a transaction and confirmation.
The process of submission of transactions is just like any other crypto wallet.
However, when it comes to confirming the transaction, it requires the authorized persons to sign the transaction.
Deploying a multi-signature wallet
You can deploy a multisig wallet with the following information:
- Required Confirmations: Number of mandatory approvals needed to execute a transaction
- Daily Limit: Set the upper limit of transaction in the wallet
- Owners: Put in the owners’ addresses you want to authorize the transaction
n-of-m multi-signature wallet
Often, multi-signature wallets are referred to as n-of-m multisigs. This means that n out of m keys should match for a transaction to execute. The most prevalent combination of keys is the 2-of-3, which means 2 private keys out of 3 are required for the transaction to complete. The mechanism enhances the safety of your wallet as even if the thieves manage to compromise one of the keys, they won’t be able to lay their hands on the cryptocurrencies stored in the wallet unless they gain access to the second key.
A 3-of-3 wallet, on the other hand, is a multi signature wallet where the keys are shared by three people and all three signatures are required for the transaction to get through.
Features of a multi-sig wallet
All the co-signers of a multi-signature wallet have the authority to view the funds and transactions of the wallet. At least two or more co-payers will be required to confirm a transaction before the funds are released. This feature certainly makes your funds a lot more secure.
At the same time, you also need to remember that if you have set up a 3-of-3 wallet and one of your co-signers loses the recovery phrases, none of you will be able to go ahead with the transaction until the lost recovery phrase is found. When you are using a multisig wallet, you and all the signatories need to ensure the safety of recovery phrases.
An interesting use case
A crypto company itself can be a very good example of using a multi-signature wallet to secure funds. With all the assets a crypto company may be having, they cannot trust a single official, no matter their position, to control all these. Providing all the concerned officials with replicated keys is not an option as it will only increase the chances of theft if the key is stolen without anyone’s knowledge.
A 2-of-3 multi-signature wallet offers the perfect solution in this scenario.
Two different keys can lie with the CEO and the accountant, while the third key can be with the board. The system will require the accountant to prepare, sign, and forward the transaction to the CEO who will confirm it. In case any of them loses their device or the keys, the board can retrieve the funds with the third key.
A multi-signature wallet covers your crypto assets in several layers of security which are almost impossible for hackers to get through. Whether you have a multi-crypto wallet or coin-specific crypto wallet, the multi-signature feature enhances the security of your wallet considerably.
If you are planning to build a multi-signature wallet, Antier Solutions can help. We are known to provide a highly-secure white label multi-signature wallet solution. In addition, we specialize in building a custom multi-signature wallet from the ground up.
Schedule a free demo of our white label multi-signature wallet or connect with our subject matter experts to share your needs for a custom wallet built from scratch.