• Multisig security offers a set of security guarantees that single-signature solutions cannot.
• Multisig wallets are referred to as “vaults” and require multiple signing devices for transactions.
• A multisig setup reduces single points of failure and minimizes trust in any one entity.
What is Multisig Security?
Multisignature security, or “multisig,” offers a different set of security guarantees than single-signature (singlesig) solutions cannot. A multisig wallet is referred to as a “vault” in apps like Bitcoin Keeper and Blue Wallet, while some also refer to it as the “coordinator” or “coordinating software.” It is basically a wallet that can talk to multiple signing devices and coordinate between them for signing transactions (generally using the PSBT format). In comparison, a singlesig wallet talks to one signer only. The singlesig wallet is also often the signer, meaning the keys are hot. So, the attack surface exposed due to a singlesig wallet and vault is similar as they both have similar roles. Having a signing device in both cases adds to the security and introduces new attack surfaces. A multisig is often referred to as an “m-of-n,” where you need “m keys out of n” to sign a transaction. An output descriptor or bitcoin secure multisig setup (BSMS) is a format that is used to define the configuration of a multisig. This can be used to recreate your setup on other coordinators or to register the multisig with the signing devices.
Benefits of Multisigs
Minimizing Trust – One of the obvious advantages of having multiple signers are to reduce single points of failure and increase redundancy in your setup With multi sig you can minimize trust in any one entityas multiple entities are involved
Operational Effort – Setting up and using multsigs can be operationally more time consuming and include more pitfalls if not done correctly which means users should only consider it for long term HODLing when regular transactions aren’t expected
Setup Costs – A robust multi vendor multi sig requires additional hardware costs but this cost may be worth it depending on how much Bitcoin you’re managing
Drawbacks Of Multsigs
Time And Complexity – Setting up MultiSigs requires technical expertise so if you’re not technically minded then this might be too complicated for you Additionally, due to their complexity setting them up takes longer than setting up traditional wallets
Hardware Costs – As mentioned above investing in additional hardware needed for MultiSigs will incur extra costs which may outweigh its benefits depending on how much bitcoin you manage
In conclusion I believe that while Singlesigs are great for small amounts or when just starting out with Bitcoin anyone holding non trivial amount should consider MultiSigs due its added layer of protection But due its complexity setting it up must be carefully considered before taking action especially given its associated costs