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Multisig

Multisignature (multisig) scripts set a condition where N public keys are recorded and at least M must provide signatures to unlock funds. This is expressed as an M-of-N threshold (e.g., 2-of-3).

Benefits​

  • Key Distribution — An attacker must compromise multiple keys in different physical locations
  • Removes Single Point of Failure — Losing one key does not mean losing funds (in M-of-N where M < N)
  • Diversify Risk — Use hardware wallets from multiple manufacturers
  • Escrow Transactions — A third party can adjudicate disputes without taking custody
  • 2FA-like Security — Keys on different devices (note: 2-of-2 is risky because losing one key makes funds unrecoverable)

Common Configurations​

SetupUse CaseRisk Level
2-of-2Two-party escrow, couple's savingsHigh — total loss if one key lost
2-of-3Personal vault, collaborative custodyModerate — tolerate one key loss
3-of-5Enterprise, inheritance planningLower — tolerate two key losses

Pitfalls​

  • Advanced setup increases possibility of error
  • More seeds to backup, more devices to secure
  • Backup of ALL public keys is required — loss of one seed plus one public key can prevent recovery even in 2-of-3
  • Must document script type and derivation paths
  • Always use testnet first; test recovery multiple times before mainnet

Tools​

  • Specter Desktop — DIY multisig coordinator
  • Casa — Managed collaborative custody
  • Unchained Capital — Collaborative custody with key recovery services
  • Nunchuk — Mobile shared vaults
  • Caravan — Open-source coordinator

Resources​