Educational Byte: What Is a Multi-Signature Wallet and What Can You Do With It?

Decentralization happens when the power is distributed among several parties. The more parties in control, the more decentralization —and the higher security, since there’s no single point of failure.

Most cryptocurrencies at least try to apply this concept in their internal systems, but you can apply it to yourself too with a multi-signature crypto wallet or address.

Imagine having a cryptocurrency wallet that's not just secure but also allows you to share control (and funds) with trusted individuals, almost like a digital joint bank account. That's where multi-signature crypto wallets come into play. They require multiple private keys to authorize transactions, making them incredibly safe. It's like having multiple keys to unlock a treasure chest.

To create one, you'll typically need a wallet app with this function available. Then, you’ll specify the number of signatures required (approvals to use the funds; e.g., 2 out of 3), designate the co-signers, and set up the address. It's like creating a financial trust circle where no one person has all the power, offering peace of mind and added security for your digital assets.

Multi-Sig Addresses Potential Use Cases

Whether you're looking for added security, sharing financial responsibilities, or planning for the future, a multi-signature wallet is a versatile and secure tool for managing your digital assets. Let’s see some use cases.

• Enhanced Security: Multi-signature wallets may require multiple private keys to authorize transactions. This means that even if one key is compromised, your funds remain safe. It's like a digital fortress guarding your assets!

• Business Partnerships: If you're running a business and want to ensure no single person has complete control over the company's funds, a multi-signature wallet is perfect. It requires multiple people to approve transactions, making it ideal for partnerships.

  
  

• Family Finances: Managing family finances? A multi-signature wallet allows you and your family members to have shared control over funds while still requiring a consensus to spend money. It's like a digital piggy bank everyone can access, but only with permission.

• Secure Inheritance: Planning for the future? You can set up a multi-signature wallet with trusted family members, friends, or even some lawyers. This way, your loved ones can access your assets in case of unforeseen events, but not without a consensus.

• Escrow Services: Multi-signature wallets are used for escrow services in various transactions. It ensures that the seller gets paid only when the buyer confirms the product or service has been delivered as promised. It's like having a digital arbiter in your transactions. In Obyte, you can also use the __ArbStore __to do this and get human help in case of any issue with your trade.
  
• 2FA Authentication: You can also be “all the signers”, by using different devices. This would be done to increase your wallet security because no one (not even yourself) would be able to spend your funds without approval from several “parties” (for instance, your laptop and mobile phone). This feature is also available in the Obyte wallet.

How to Create a Multi-Sig Address in Obyte

First of all, you’ll need to download and back up the Obyte wallet app. This one is available for desktop (Windows, Mac, and Linux), and mobile (Android and iOS). If you want to be “all the signers” of your multi-sig address(es), you’ll need to download the app to every device involved and pair all of them.

To pair a new device, either yours or controlled by another co-signer, you need to go to the Chat tab – Contacts – Add new device. Then, you can either send an invitation yourself (in the form of a QR code) or accept an invitation received by the other party. Once paired, the name of the new device should appear in your Contact list.

Next, in the Main Menu of the wallet (three parallel lines in the upper left corner), you’ll find the option to “Add account/Create New account.” Select “Multidevice account,” and set up your co-signers. They need their own Obyte wallets/devices previously paired with yours to appear in the list of options. Click on “Create account,” and that’s it!

The multidevice account will have its own Obyte address to send and receive funds and will appear separately in the main menu. Now, if configured that way, every time one of the signers tries to move funds from there, most of the other signers will receive a notification on their own devices asking for approval. This way, the coins will be spent only if there’s consensus among signers.

On the other hand, you could also use your multidevice account only to have access to your funds from multiple devices at the same time (e.g., laptop and phone). The required co-signers would be 1-of-2 or 1-of-3, assuring that one device approving transactions is enough. If you configure it this way, no approval from other devices is required.

Obyte simplifies multi-signature security, ensuring that your crypto assets are both easy to manage and exceptionally secure. It's the smart choice for those seeking peace of mind in the world of digital currencies.

Featured Vector Image by vector4stock / Freepik