Multi-signature (often shortened to multisig) is a concept that requires a certain number of signatures to sign a transaction in order for it to be valid. When a multisig address is created up to 15 private keys may be assigned, at the same time the minimum number of keys required to complete a transaction is specified.
Multisig addresses have several valuable use cases, including:
- Increased wallet security. By requiring two or more signatures it is possible to keep each key in a different location, meaning if one location is compromised the bitcoins will still be secure.
- Escrow services. By requiring 2 of 3 signatures a buyer and seller can appoint an arbitrator in advance in case of a dispute.
- Increase corporate governance. A corporate entity can require that more than one individual is required to spend the company’s funds.
For a user friendly way of using multisig addresses as escrow take a look at Bitrated.
We will soon be publishing a review of different wallets. If you would like your wallet to be featured please get in touch.