📝 Definition:
Multi-Sig, short for Multi-Signature, is a security feature that requires many keys to allow a cryptocurrency transaction.
This means more than one person or device must approve the transaction, making it safer and harder for hackers to steal your funds.
🔑 Key Features:
- Multiple Signatures: Requires two or more private keys to allow a transaction.
- Increased Security: Reduces the risk of theft or unauthorized access.
- Shared Control: Useful for organizations or joint accounts where many approvals are needed.
- Flexible Configurations: Can be set up with different rules, like 2-of-3 or 3-of-5 signatures required.
⚙️ How It Works:
- Set Up Multi-Sig Wallet: Create a wallet that requires multiple signatures for transactions.
- Distribute Keys: Share the private keys with trusted parties or devices.
- Allow Transactions: To make a transaction, the required number of keys must sign off on it.
- Confirm and Execute: Once all the required signatures are done, the transaction is allowed.
💡 Applications:
- Joint Accounts: Used by businesses or groups to ensure multiple members approve transactions.
- Enhanced Security: Adds an extra layer of protection against theft and fraud.
- Smart Contracts: Utilized in decentralized applications for more secure and automated transactions.
🔍 Example:
Imagine you and your friends have a joint savings account.
To withdraw money, you all must agree and sign a document.
In the crypto world, Multi-Sig works the same way.
You need multiple approvals to complete a transaction, this way your money is safer.