quoting nevent1qโฆkzvk๐ ๐๐น๐๐ถ๐๐ถ๐ด ๐๐. ๐ฆ๐ฝ๐น๐ถ๐๐๐ถ๐ป๐ด ๐๐ฒ๐๐
To truly own your bitcoin, you must custody your private key. This usually involves writing down a 12 or 24-word seed phrase, and keeping it offline where itโs safe from theft, flood, and fire.
But what if itโs discovered? Is it safer to use multiple private keys connected to the same wallet, or to split up a single seed phrase into multiple pieces?
Letโs explore this below๐
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Multisignature, commonly referred to as ๐ฎ๐ถ๐ญ๐ต๐ช๐ด๐ช๐จ, is a method of ๐ฑ๐ถ๐๐๐ฟ๐ถ๐ฏ๐๐๐ถ๐ป๐ด ๐ฐ๐ผ๐ป๐๐ฟ๐ผ๐น ๐ผ๐๐ฒ๐ฟ ๐ฎ ๐ฏ๐ถ๐๐ฐ๐ผ๐ถ๐ป ๐๐ฎ๐น๐น๐ฒ๐ ๐๐๐ถ๐ป๐ด ๐บ๐๐น๐๐ถ๐ฝ๐น๐ฒ ๐๐ต๐ผ๐น๐ฒ ๐ฝ๐ฟ๐ถ๐๐ฎ๐๐ฒ ๐ธ๐ฒ๐๐. So instead of one private key being used to control the asset, multiple private keys are required to sign, execute, and validate a transaction.
The most common multisig implementation is a 2-of-3 scheme, where any 2 of the 3 private keys are needed to sign a valid transaction. In this setup, ๐ฏ๐ฐ๐ฏ๐ฆ ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐ฌ๐ฆ๐บ ๐ด๐ช๐จ๐ฏ๐ฆ๐ณ๐ด ๐ฏ๐ฆ๐ฆ๐ฅ ๐ต๐ฐ ๐ฑ๐ณ๐ฐ๐ท๐ช๐ฅ๐ฆ ๐ต๐ฉ๐ฆ๐ช๐ณ ๐ฑ๐ณ๐ช๐ท๐ข๐ต๐ฆ ๐ฌ๐ฆ๐บ ๐ต๐ฐ ๐ต๐ฉ๐ฆ ๐ฐ๐ต๐ฉ๐ฆ๐ณ๐ด, allowing for trustless wallet management, even among a walletโs co-owners.
Contrasting that with splitting your private key into smaller pieces, ๐ข๐ฏ ๐ข๐ต๐ต๐ข๐ค๐ฌ๐ฆ๐ณ ๐ค๐ฐ๐ถ๐ญ๐ฅ ๐ฑ๐ฐ๐ต๐ฆ๐ฏ๐ต๐ช๐ข๐ญ๐ญ๐บ ๐ข๐ค๐ค๐ฆ๐ด๐ด ๐บ๐ฐ๐ถ๐ณ ๐ค๐ฐ๐ช๐ฏ๐ด ๐ฃ๐บ ๐ฐ๐ฃ๐ต๐ข๐ช๐ฏ๐ช๐ฏ๐จ ๐ซ๐ถ๐ด๐ต ๐ฐ๐ฏ๐ฆ ๐ฑ๐ช๐ฆ๐ค๐ฆ, and then correctly guessing the rest. ๐๐๐ฒ๐ฟ๐ ๐๐ผ๐ฟ๐ฑ ๐๐ต๐ฒ๐ ๐ต๐ฎ๐๐ฒ ๐ผ๐ณ ๐๐ผ๐๐ฟ ๐๐ฒ๐ฒ๐ฑ ๐ฝ๐ต๐ฟ๐ฎ๐๐ฒ ๐บ๐ฎ๐ธ๐ฒ๐ ๐ถ๐ ๐ฒ๐ ๐ฝ๐ผ๐ป๐ฒ๐ป๐๐ถ๐ฎ๐น๐น๐ ๐ฒ๐ฎ๐๐ถ๐ฒ๐ฟ ๐๐ผ ๐ด๐๐ฒ๐๐ ๐๐ต๐ฒ ๐ฟ๐ฒ๐บ๐ฎ๐ถ๐ป๐ถ๐ป๐ด ๐๐ผ๐ฟ๐ฑ๐, but that is not the case with multisig.
It's important to note that multisig can be implemented at different levels, such as at the blockchain or consensus level โ which provides the highest level of security โ or by a particular application, which is far less secure. If the number of signers or authorization keys can be changed without a publicly-visible transaction on the blockchain, ๐๐ผ๐'๐ฟ๐ฒ ๐๐๐ถ๐ป๐ด ๐ฎ ๐น๐ฒ๐๐ ๐๐ฒ๐ฐ๐๐ฟ๐ฒ ๐ฎ๐ฝ๐ฝ๐น๐ถ๐ฐ๐ฎ๐๐ถ๐ผ๐ป-๐ฝ๐ผ๐น๐ถ๐ฐ๐-๐ฏ๐ฎ๐๐ฒ๐ฑ ๐๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ, where the authors of the application ultimately control the asset.
Multisig offers several benefits, including increased security, as it requires multiple signatures to create a transaction, making it much more difficult for an attacker to compromise your wallet. Additionally, ๐ฒ๐ฎ๐ฐ๐ต ๐ฝ๐ฒ๐ฟ๐๐ผ๐ป ๐ถ๐ป๐๐ผ๐น๐๐ฒ๐ฑ ๐ถ๐ป ๐๐ต๐ฒ ๐บ๐๐น๐๐ถ๐๐ถ๐ด ๐ฐ๐ผ๐ป๐ณ๐ถ๐ด๐๐ฟ๐ฎ๐๐ถ๐ผ๐ป ๐ต๐ฎ๐ ๐๐ต๐ฒ๐ถ๐ฟ ๐ผ๐๐ป ๐ฏ๐ฎ๐ฐ๐ธ๐๐ฝ, so if a key is lost or stolen, a new multisignature wallet can be created, and the other key holders can move the funds into the new wallet.
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