Why Multi Signature Wallet?
Before we proceed to Multi Signature Wallet (Multisig) You need to know more about what is Crypto Wallet. No matter who is it, everyone will have money more or less, to keep money safe without losing it you need to keep them in a safe place like a wallet, case, bank, or home. Everyone loves a convenient thing because of it everyone will use a common thing like a wallet to keep their money and able to use them every time they need it. But after Cryptocurrency uprising years ago there is no way to keep safe your digital money on your normal wallet that's why you need a very special wallet for it, this crypto wallet has very special and unique design to handle your digital money (Cryptocurrency) but before that you need to know there are some types and they have their disadvantages and advantages too.
Crypto Wallet is a wallet software specialize to keep your digital currency, with it people also able to sent or receive payment in crypto you wanted the best thing is some crypto wallets already include features like a crypto exchange, buy or sell, and multi-cryptocurrency, in other words, you have full control over your assets. Indeed, there are some wallets build only accept one or some specific crypto, but out there are wallets accept any kind of crypto, there are Applications, Offline, and Online wallets available. Moreover, for long term investment, these multi-cryptocurrency wallets are the best option for you. For additional information, there are 2 main things you need to know about a crypto wallet, thus: Public Key and Private Key for a wallet.
Public Key (Wallet Address): Unlike traditional paper money, Crypto wallet connected to Blockchain Network which every transaction that you made will be noted and everyone will able to see it, this Public Key is more like your Bank Account Number which used to receive Cryptocurrency but Crypto Wallet a bit complicated and very hard to remember it because every Wallet Number (Wallet Address) consists of combination number and letter there also upper and lower case too. This Public Key or Wallet Address is an Alias for every holder and keeps personal information hidden and secure.
Private Key: If Public Key is Wallet Address, then Private Key is your account password or PIN, this Private Key used to access and manage your Crypto Wallet, this Private Key also consists of letter and number include with upper and lower case. So, for security reasons it much better if you save your Private Key somewhere safe and make sure you don't lose it if that happens you need to say goodbye forever, or if you want to make your wallet more secure and very hard got hacked then you could consider to use multisig (Multi Signature Wallet).
As we said before, there are some types of Crypto Available today, there is an Application-based wallet, Online or Offline, and the last is hardware type crypto wallet, all of them have their advantages and disadvantages and we will write them in a very simple way.
- Smartphone (Application) Based Wallet: Like Desktop Based Wallet, to use this Wallet you have to download and install the software to your smartphone, but the Fact is this kind of wallet is the most popular because it's very convenient and accessible anywhere. While this wallet has very limited access and only able to do a simple task like checking Balance, this kind of wallet also has a high risk of security reasons, like infected by Viruses, Malware, and Spywares, losing or stolen smartphone will give you a lot of trouble.
- Hardware Wallet (a Ledger): This Wallet comes with physical appearance shaped like Flash Drive or USB, if you want to receive or sent crypto then all you need it insert the ledger into computer that connected to the Internet, the ledger able to keep more than 22 cryptocurrencies and hundred of ERC-20 Tokens, this kind Wallet is the best to store a large amount of crypto and for long term investment. But, if you are losing or get the ledger stolen then you will lose all your crypto without any chance to recover it anymore.
- Paper Wallet: This is the last thing of their kind, the paper will contain a special QR-Code with Public and Secret Key, this Paper wallet is progenitor of Hardware wallet (A Ledger), people think this paper wallet is convenient and secure because there is no way for hacker hack them or got infected because it doesn't connect to the Internet, but still the users need to keep the paper wallet safe from fire, water or losing it.
What is Multi Signature Wallet?
To manage Cryptocurrency multisig Wallet you need special knowledge for more security, generally to keep crypto wallet secure you need to use Multisig features, what is multisig? Multisig mean Multi-Signature, this is a kind of unique digital signature which allows two or more users to sign documents as a group, Therefore, a combination of multiple signatures which creates unique Multisig technologies which already there since 2012 the first creation of cryptocurrency, Bitcoin address applies this technology which leads the creation of first Multi Signature Wallet. For simple understanding, if there is a safe box with 2 locks and 2 keys, Jack hold one key while another key hold by Sam, to open the safe Jack and Sam need to combine and work together in order to open the safe at the same time, but they will not able to open the safe if one of them don't want it. In other words, all the fund at your multisig wallet only able to access if you able to get all consent of signature holder, because of it, Multi Signature wallet allows users to make another layer for their fund safety for additional information, much better if you learn more about basic crypto address which single and multi keys.
Single Signature Vs Multi Signature (Multisig) Wallet
Normally, Crypto will be kept on a Wallet with standard Single Key (Signature), so for this single key holder will able to access all fund and it would be bad if the Keyholder has a nasty thought, he will able to sent all the fund anywhere without any permission from anyone else, although, using single key wallet very fast and convenient but in the other side hacker will very easy exploit with phishing because there is only have a single key. Even more, Wallet with single signature isn't the best choice for business that related to cryptocurrency, just imagine it if some Big Company has a big fund and only stored on Standard Wallet with a single signature (Secret Key), that means the Wallet only trusted to someone and it's very risky.
Multi Signature Wallet (Multisig) will able to overcome the problems, unlike single sig, the fund on multi signature wallet only able for access if everyone giving their consent, and the rest depends on that Multisig wallet this may need combination of numbers and letters as for the signature access if there are 4 signature then at least you will need 3 signatures before gain the wallet access. There is some possibility this kind wallet will be very popular for Big Company to use, and below there are some usability of Multi Signature Wallet:
- Security: By using Multi Signature Wallet, the users able to avoid problems like the secret key is missing or forgetting, and if one of the keys compromised the fund inside wallet still sound and safe, For Example: Jack creating a multi signature wallet and come out with 3 different secret keys (signatures) and store them into different place, later Jack miss one of the secret keys it may be stolen by thief or compromised by malware, spyware, or viruses then the attacker will not able to access the fund at least they need 2 secret key for it.
- 2 Factor Authentication (2FA): With Multi Signature Wallet (Multisig) Jack will able to create 2 or more secret key, to add more protection layers to keep you fund safe you could consider to active 2 Factor Authentication feature, even hacker got all of your secret keys still they will not able to access your fund without 2FA, to active 2FA you need to pair it with your smartphone (Google Authenticator is the best) or your Desktop but if you lose your 2FA access you will lose all of your money.
- Escrow: The of Multi Signature Wallet is you able to use become as an Escrow, for example: if Jack has a business deal with Sam but both have agreed with include someone else as witness (Let's call John) for the deal, First as the Buyer Jack need to deposit the fund to the Wallet then after Sam doing his job as promised, both Jack and Sam will unlock the Account with their secret keys and Jack will confirm about the Deal has finished to John, so John will able use the Last key to release the Fund to Sam.
- Decision Maker: A group of people could use Multi Signature wallet to control their Company fund, for example: if the Wallet configurated with 4 or 5 secret keys, then at least to access the wallet the Company required to get 4 Secret Keys.
Even though Multi Signature Wallet is a solution for many problems, still it's important to realize that there are still some limitations, to set up a multisig wallet the users still need technical knowledge and for you that want to depend on the third party. With some limitations, at least this Multisig wallet has some advantages and worth enough for you to consider if you have a large fund need to manage.