What is Multi-sig? Intro to its Features and Benefits
Do you know the term “multisig?” In this article, I will explain the features and benefits of multisig, which is a technology that improves security.
Features of multisig
Multisig is an abbreviation for “multi signature,” a technology that requires multiple private keys to sign a transaction. Compared to a single signature that can be signed with one private key, not only does it have high security, it is easier to deal with when a private key is lost, and it is also used in multisig wallets. It is often adopted in exchanges where robust security is required.
For multisig addresses, transactions can be made by signing with some or all of the private keys corresponding to multiple public keys registered. For example, if three public keys are registered and there are two corresponding private keys, transactions that can be processed are called 2 of 3 multisigs. Since the address of the single sign starts from 1, the address of the multi-sig starts from 3, so it is possible to judge whether multi-sig is introduced by looking at an address.
Practical example of multisig
There is Escrow as a practical example of multisig. Escrow means to make a third party mediate between the seller and the buyer in order to guarantee the safety of the transaction, but by using the multisig procedure, it is possible to make this exchange more efficient, and Escrow can be done with ease.
Detailed information about escrow is written in this article, so please read it.
One of the big advantages of multisig is that it is possible to improve security and respond to lost private keys.
First of all, concerning security, there is no worry of losing your assets because it is impossible to access the asset with only one of its private keys if it is multisig. Even if one private key’s information is leaked to the outside by hacking you are safe. Risk is highly greater when using a single signature wallet.
Secondly, considering the scenario where someone loses their private key, in the case of a single signature wallet, losing the private key will directly lead to loss of the assets. This is because if you do not have a private key, you cannot access the address, so transactions become impossible to complete as your assets are not accessible. However, in the case of the multisig of 2 of 3 example above, even if one private key is lost, the remaining two can be used to access the address, so the user will not lose their assets.
However, if all the private keys are stored on the same terminal and the terminal is broken, it will be in the same state as if the single-sig private key is lost, so each private key should be sent and stored on another terminal, demonstrating the importance of keeping your private keys safe. Also, if you lose one multisig private key, if the same thing happens again, the asset cannot be moved, so it is necessary to promptly switch to another multisig wallet.
In this way, multisig is a very useful technology to improve security and reduce the risk of losing assets. It surely will be introduced to various services in the future.