Multi-signature authentication (often referred to as multisig in cryptocurrency and blockchain) is a security feature that requires multiple private keys to authorise a transaction. Instead of relying on a single private key, multisig requires a predefined number of keys out of a larger set to sign a transaction before it can be executed.
For example, a transaction is initiated and must be signed by the required number of private keys (e.g., two out of three in the two-of-three setup). Once the required number of signatures are collected, the transaction is verified and then executed on the blockchain.
Since multiple private keys are needed, the compromise of a single private key does not lead to unauthorised access. This is particularly useful for preventing theft and hacking, and for corporate accounts or joint ventures where decisions need approval from multiple parties, ensuring that no single party can unilaterally control the funds.
Additionally, multisig setups can be designed to provide backup keys. For example, in a two-of-three setup, if one key is lost, the other two can still authorise transactions, ensuring access to funds isn’t permanently lost.
