Multisignature (multisignature, multisig) is a mechanism for protecting cryptocurrency funds in which confirming a transaction requires not one signature but several. Access to funds is distributed among different private keys, and an operation is considered valid only when the required number of signatures has been collected.

How multisignature works

A multisignature scheme is described by a formula of the form "M of N": there are N keys in total, and to confirm a transaction at least M of them must be used. For example, in a "2 of 3" scheme three keys are created, and any two are enough to transfer funds. This approach eliminates a single point of failure: the compromise of one key does not lead to the loss of access to funds.

Distributing keys provides several important advantages:

• increased security — a single stolen key is not enough to withdraw funds;
• protection against loss — if one key is lost, access can be restored using backup keys;
• joint control — funds can be managed by a group of participants, which is convenient for companies and funds.

Thanks to these properties, multisignature is widely used in wallets, corporate asset storage and services with heightened security requirements.