A normal wallet has a single point of failure: one phrase. Multisig removes it. This guide is part of our guide to advanced setups.
How it works
A multisig wallet is set up with several keys, along with a rule: M of N. In a 2-of-3 wallet, there are three keys, and any two can approve a spend.
Each key has its own device and recovery phrase, and each one lives in a different place.
What it protects against
| Event | Single seed | 2-of-3 multisig |
|---|---|---|
| One phrase stolen | Funds lost | Funds safe |
| One phrase lost | Risky | Funds safe, replace the key |
| Burglary at one location | Risky | Funds safe, if the location has one key |
| Coercion at one location | Funds at risk | Harder |
| Death of the owner | Depends on the plan | Can be designed for heirs |
The price you pay
- Setup is harder. You need more devices and a wallet that handles multisig.
- Spending is slower. You need to reach two keys.
- You have more to back up. See below.
- Fees can be higher, depending on the network and setup.
- Mistakes are possible. Practice first.
The backup that people forget
With multisig, your seed phrases are not enough on their own. You also need the wallet's configuration: the public keys of all participants and the M-of-N rule. This is often called a descriptor. It is not a spending secret, but losing it can make recovery very hard. Keep a copy with each key.
Common setups
| Setup | Good for |
|---|---|
| 2-of-3, all your own keys | A solo holder |
| 2-of-3 with family | A family |
| 2-of-3 with a collaborative service | People who want help with recovery |
| 3-of-5 | Large or institutional holdings |
When it beats a single seed
Multisig is worth considering when your holdings are large enough that a single mistake would change your life, and you are willing to learn and practice. For smaller amounts, a good phrase backup and possibly a passphrase are simpler.
Compare it with a passphrase and with Shamir backups.
Plan for your family
Multisig can be excellent for inheritance, or it can be impossible for heirs to use. Write clear instructions. See crypto inheritance.