If you’re considering upgrading security over your digital assets, then the new multi-signature wallets should interest you.
I’ll not point specifically to any wallet but I’ll show you why the new multisig wallet technology outperforms a traditional digital wallet.
First and most importantly, the difference between a Multisig wallet and a regular digital wallet is that a multisig wallet requires additional signatures to authenticate or authorize a payment transaction.
What this means is that a cosigner will have to authorize a cryptocurrency transaction after the user or owner of the wallet has initiated a transaction.
This serves as an added level of security check to limit incidences of hacks or payments from unauthorized users.
SEE ALSO: Are Multi-sig Wallets Truly Safe?
While setting up a multisig wallet, you will be required to configure the signature feature.
I will illustrate this with the popular Electrum multisig wallet wizard.
Besides the Electrum wallet, all other multisig wallet has this feature and it is very straightforward to apply when you download one from their official site (that’s recommended).
Let’s then explore the features of a multisig wallets and why it outperforms regular digital wallets.
How Multisig Wallets Outperform Traditional Digital Wallets
1. Added Layer of Security and Backup
The multi-sig wallets are upgrades from the regular digital wallets which require the user’s signature to authorize all transactions.
This, therefore, means that a wallet could be compromised if the wallet’s private keys to the hands of the wrong person.
With multi-sig wallets, there are no chances of loss or theft even if the owner of the wallet misplaces or loses his/her private keys.
A second signature will be required to move cryptocurrency out of the wallet.
With this feature, multisig wallets are safer as no hack can be executed unilaterally without an accomplice or a notification to the wallet’s owner.
SEE ALSO: How Does a Multi-Signature Wallet Work?
2. Stricter Protocol and Better Auditing
Businesses considering holding some of their funds in cryptocurrency adopt the multisig digital wallets.
The multi-sig feature appeals more to businesses and corporations that hold Bitcoin and other cryptocurrencies.
The concern of keeping these digital assets under the preview of one person or signature is void of regulation, monitoring, and accountability.
Similar to a checking bank account with directors’ signatures and payment instructions on their mandates, multisig wallets embrace the same protocol in authorizing payments.
With a multi-sig wallet, just one person cannot unilaterally withdraw the entity’s funds without a cosigner authorizing such withdrawals or transfers.
Multisig wallet eliminates that by introducing better control protocols with various levels of authorization.
SEE ALSO: BitBox02 Hardware Wallets – Why You Should Buy One
3. Zero Reliance on One Device
A multisig owner can save more than one private key in more than one location.
The user could save his private keys on his mobile phone and save another on his desktop.
If any key get’s missing, he can retrieve and still gain access to his wallet with the second key.
This also takes away fear from the user having to always think about a complete loss of his assets just in case he loses his private keys.
4. Multisig Wallets as Escrows
Multisig wallets could be used as an Escrow account for commodities trading or any kind of service involving two parties (buyer & seller). The Escrow account works this way…
For example, if a multi-sig wallet user wants to buy an item, the buyer could fund a multi-sig wallet in crypto. The seller verifies the inflow and sees the funds or coins on a view-only mode.
Once the seller ships product to the buyer who confirms, the buy can authorize payment and the seller confirms with his signature to complete the transaction.
5. Multisig Wallets Compatible with Other hardware wallets
With multisig auditable open-source software, these wallets can be fused into a regular or traditional wallet.
If you own a digital wallet such as Ledger or Trezor, then, you can download a multisig such as Electrum and link this wallet to it.
This means you can activate the multisig feature on your hardware wallets for better security and safety of your coins.
SEE ALSO: 3 Key Things to Look out for When Buying a Hardware Wallet
Final Thoughts
As cryptocurrency gains more acceptance globally so are its risks. However, crypto enthusiasts, scientists, and programmers are usually a step ahead in providing better storage devices that offer convenience and most importantly, security of your digital assets.
Image credit: Computer vector created by sentavio – www.freepik.com
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