What is Multisignature?
Multisignature, often abbreviated as multisig, refers to requiring multiple keys to authorize a transaction. It is a digital signature scheme which allows a group of users to control a single or account.
How Multisignature Works
In a multisig setup, a transaction must be authorized by more than one . For example, in a 2-of-3 multisig wallet, there are three possible keys, and at least two must be used to execute a transaction.
Benefits of Multisignature
- Enhanced Security: Reduces the risk of a single point of failure, making it harder for unauthorized users to access funds.
- Shared Control: Useful for organizations or groups where joint control of funds is required.
- Backup and Recovery: In case one key is lost, the other keys can still secure access to the assets.
Use Cases in Blockchain
- Corporate Wallets: For managing company funds requiring approvals from multiple departments.
- Escrow Transactions: Involving a third party for secure and agreements.
- Complexity: Setting up and managing a multisig wallet can be more complex than a standard wallet.
- Coordination: Requires coordination among key holders, which can be challenging in some scenarios.