Multi-Sig: Multi-Signature

Multi-signature (Multi-Sig) are a type of specialized cryptoasset wallet that require signatures from multiple parties to authorize transactions. Most multi-sig wallets run on an “M-of-N” model. For example 2 of 3 if there are 3 authorized signers or 3 of 5 if there are 5 etc…

Multi-sig wallets enable oversight of funds commingled together from many individuals like a DAO treasury. They are also useful for business entities that need to demonstrate they have systems in place to properly manage and protect client assets. Like centralized cryptoasset exchanges.

Multi-sig wallets are also commonly leveraged for escrow transactions. It’s easy to see why. Party X sells a product to Party Y with Party Z acting as the Escrow agent. 

Y signs a transaction in a multi sig wallet to disburse funds to X. X sends the product to Y. The funds are released to X when Z confirms Y has received the product and signs off on the payment as well.

Further Reading Multi-Sig

Multi-signature Wallets Can Keep Your Coins Safer (If You Use Them Right)