What is a Multisig Wallet?
Multisig wallets are a type of Bitcoin wallet that uses multiple private keys to access digital funds. These wallets provide an extra layer of security by distributing the private keys among different people or devices, thus preventing any single entity from taking sole control. This makes them more resistant to online threats such as hacks, malware and phishing attacks.
Risks of Not Using Multisig Wallets
Without a multisig wallet, users are at risk of losing their funds due to accidental losses like leaving bitcoin in centralized exchanges that have gone bankrupt or vanished due to rug pulls. Additionally, those who do not use multisig wallets may face privacy issues if they use custodial companies for key management.
Collaborative Multisig Wallets
In collaborative multisig wallets, users typically have control over one private key while the third party (exchange/custodian) holds the second key online and the third offline in cold storage. This solution provides convenience but comes with drawbacks like KYC procedures and geographical limitations.
For extra security, DIY wallets allow users to buy their own components and build their own device that generates secure private keys without leaving any trace. This is beneficial for countries where hardware wallets are not available or have poor delivery services and also offers low-cost solutions.
Best MultiSig Wallets
The best multisig wallets include Casa (collaborative), Ledger (DIY), Trezor (DIY) and BitGo (collaborative). Each offers different levels of security depending on user preference as well as cost considerations.