You have outgrown a simple backup. Should you add a passphrase, or go multisig? This advanced comparison is part of our guide to advanced setups.
Side by side
| Question | Passphrase | Multisig (2-of-3) |
|---|---|---|
| Extra hardware | None | Two more devices |
| Protects a found phrase | Yes | Yes |
| Protects against one lost secret | No | Yes |
| Single point of failure | The pair of secrets | Removed |
| Setup difficulty | Moderate | Higher |
| Daily use | Enter it each time | Needs two signers |
| Network support | Works anywhere | Varies by coin |
| Mistakes | Silent, with an empty wallet | Visible, but more steps |
| Inheritance | Hard if forgotten | Can be designed in |
How each one fails
Passphrase: you forget it, or a typo locks you out. If an attacker gets your phrase and your passphrase is weak, it can be cracked. Malware on the device can also capture what you type. See should you use a passphrase?.
Multisig: you lose too many keys, or you lose the wallet configuration. Poor practice can leave all your keys in one place, which removes the benefit.
Which should you choose?
| Your situation | Good choice |
|---|---|
| Modest holdings, and a found phrase is the main worry | Passphrase |
| Large holdings, and you can look after several locations | Multisig |
| You hold many coins | Passphrase, as multisig support varies |
| Shared control with a partner or family | Multisig |
| You do not want more hardware | Passphrase |
| You worry about a single mistake | Multisig |
Simple first
A simpler setup that you understand beats a clever one that you do not. If you are unsure, start with a tested backup. Add a passphrase next, and consider multisig as your holdings grow.
What about Shamir?
Shamir backups split one seed into shares. Read Shamir vs multisig.
Whichever you choose, practice with a small amount, write down your procedures, and include them in your inheritance plan.