Bitcoin is a cryptocurrency that has brought several other technologies with it. Many of them have renewed the way we think about carrying out transactions, as is the case with Blockchain. However, among all of these possibilities, the multi-signed wallet represents a part of this type of flexible technology that can help ensure the safety of cryptocurrency users.
In this text, we will understand a little more about its features. Check out!
What is multisignature?
Multisignature is a bitcoin custody portfolio that requires withdrawals from more than one person to make withdrawals depending on the configuration of this portfolio. This means that if one person’s password is revealed to the public, it will still not be possible to withdraw by an unknown person.
How does this tool work for transactions?
In 2012, a new type of address known as P2SH (pay-to-script-hash) was developed. Its main feature is that, instead of starting with the number 1, it starts with 3. Therefore, because it is an address that can support several private keys, it is the one used for multi-signature.
In general, we can say that P2SH and multisignature work as a safe, which can only be opened with at least two keys. So, in the case of multi-signed portfolios, to move your funds, you will need, at least, the consent of one more signatory.
Why is it important?
Despite the simplicity of the default Bitcoin address, this is not a guarantee of ease of transaction. First, there is the security problem in relation to cryptocurrency keys, as they, once created, are only placed on a single device and only encryption guarantees their security.
The problem is that it is possible that there are failures to access the machine, or even, the file containing the address may be stolen. A hacker or malware can take advantage of the moment when the user types the password to steal it. There are programs that can record what you type on the keyboard, and a good example is the key-logger.
Using a multi-signed wallet is a way to protect your funds, as the only way to move such funds is through multiple signatures. Thus, even if a person obtains one of the keys, he will need all the others registered to be able to carry out a simple financial transaction.
What are the advantages of using a multi-signed wallet?
Here, we will learn about some of the benefits that multi-subscriptions can bring. Follow us!
Elimination of failure points
Multi-signatures have the advantage of being able to eliminate single points of failure in accessing currencies. For that, it is necessary that the owners manage their keys and keep them in different places, that is, it is possible to create a key on the cell phone and another one on the notebook, for example.
In a multi-signed wallet, several signatories can be configured. Example: there are 5 co-signers requiring at least 3 to authorize. Any combination of 3 out of 5 already manages to move funds from this portfolio, that is, in the absence of 1 or the other, there will always be the possibility of movements. The creator of the multi-signed portfolio is the one who defines how many co-signers and the minimum amount for.
In many situations, money needs to be managed by more than one person – a company that needs to authorize payment, a couple that has a joint account, among other situations, are good examples. In such cases, multi-signatures can be very useful for everyone to manage cryptocurrencies safely.
How to create multisignature?
There are some mechanisms that facilitate the process of creating multi-signatures today. Often, with just 4 clicks, it is already possible. However, if you have a wallet that does not have this functionality, you will have to roll up your sleeves and generate your own address.
First, you need to have as many Bitcoin addresses as far as the number of participants is concerned. For example, in a case where we will use 3 addresses, we will program in a way that it will be necessary to have only 2 of these keys to authorize a transaction. In this case, it will be a 2 by 3 address.
After generating these addresses, the public keys of those 3 must be delivered to one of them. With them in hand and already programming the quantity to confirm a transaction, it is time to generate the P2SH address.
Created the P2SH, now, any of the 3 chosen keys can start an operation. But, for that, it is necessary that you, holder of a private key, sign / authorize the transaction and then pass the result on to another person, so that they, with your key, can sign and, thus, authorize the transaction. bottom movement.
Bitcoin wallets and multi-signatures
First of all, it is important to make it clear that Bitcoins wallets are capable of managing addresses, but not of creating them. In the market, you will find different types that allow this functionality, such as Copay, GreenAddress, Armory and Electrum.
Some of these wallets are considered lightweight, and the user must be aware, as there are chances of privacy leakage. It’s good to know that this type of device also allows you to use the default address.
There are also options for hardware wallets, that is, that are in a physical compartment, as a kind of pen-drive. Therefore, in order to use multi-signature addresses, it is necessary to associate the public key with the private one that manages the portfolio. In this way, it is possible to create a multi-signature address.
Well, as we have seen, multi-signatures with Bitcoins wallets can be quite useful tools for maintaining cryptocurrencies, in addition to being a great way to keep currencies and securely carry out transactions on the Blockchain.
These tools, mainly the multi-signatures, come to sediment the Bitcoin universe and show that this option of money is not temporary, it is the future of financial transactions, ensuring that all operations with the cryptocurrency can be done without risk and in a practical way. .