Multi-Signature (Multi-Sig) Definition
Multi-signature (Multi-Sig) refers to the requirement of multiple cryptographic keys to authorize a blockchain transaction. Instead of the traditional method where one key is used, the implementation of a multi-signature design ensures that multiple parties must give their approval for a transaction to occur.
Multi-Signature (Multi-Sig) Key Points
- It’s a digital signature scheme which allows a group of users to sign a single document.
- Usually, a multi-sig system is used for added security or to divide responsibility among a group.
- The multi-sig design is used to protect against theft, as a cybercriminal who gets hold of a single key will not be able to steal the assets.
What is Multi-Signature (Multi-Sig)?
Multi-signature is a protocol that requires validation from multiple parties for a transaction to be executed in the Blockchain network. It’s essentially an agreement among multiple parties to authorize a specific Blockchain transaction. Moreover, it is a powerful tool in providing enhanced security to blockchain transactions and to users’ digital assets.
Why is Multi-Signature (Multi-Sig) Needed?
Multi-signature is needed because it adds an extra layer of security to blockchain transactions. In a traditional single-key blockchain transaction, if a malicious party gets access to the key, they have complete control of the assets. However, with multi-signature, several keys are required. This reduces the risk of theft, as getting hold of all keys is typically more difficult.
Where is Multi-Signature (Multi-Sig) Used?
Multi-signature technology is widely used in the domain of cryptocurrencies, such as Bitcoin and Ethereum. It is used in crypto wallet technology, for instance, to ensure the safety and security of the assets. It is also used in other blockchain-based applications to provide enhanced security and trust.
Who uses Multi-Signature (Multi-Sig)?
Multi-signature is used by individuals, businesses, and organizations that are operating within the blockchain and cryptocurrency space. This includes, but is not limited to, crypto users, traders, blockchain developers, financial institutions, and blockchain-based organizations.
How does Multi-Signature (Multi-Sig) Work?
In a multi-signature setup, multiple keys are created, and a certain proportion of those keys must be used to authorize a valid transaction. The specific number of needed keys is pre-determined when the multi-sig wallet is set up. For instance, in a 2-of-3 multi-signature wallet, three keys are created, and at least two of them are required to form a valid transaction.
