However, managing all the facets that go in to private key security isn’t for everyone and if you’re not technically minded, it can be overwhelming to wrap your head around.
Thankfully, there are companies out there that provide multi-sig management services which add an extra layer of security whilst removing the situation of a single point of failure if you lose your private key.
Managed multi-sig Bitcoin wallets require multiple private keys to send Bitcoin from it, with the private keys split between a company and the individual.
If an individual wants to send Bitcoin from such a wallet, they will also need to contact the company they set up the multi-sig wallet with in order to provide the required amount of private keys.
There are different configurations that can be used to set up the multi-sig which are covered here in the “What are different configurations” section.
The idea behind these wallets are that when you set up a wallet with a company, you will not be able to spend your Bitcoin if you aren’t able to get the private key from the company.
This also means that the company can’t spend your Bitcoin either as you have the other private key required to send it.
Some configurations like 2-of-3 or others can be used where 3 different private keys exist but only 2 are required at one time. Usually to get the private key from the company, you will need to go through some 2FA or email confirmation to access your Bitcoin.
The main advantage is that you’re removing the single point of failure that can go wrong with “single-sig” wallets. By doing this, you’re adding a layer of security where your Bitcoin will be more secure in the event of a worse-case scenario.
Another advantage is that the complexity of holding multiple keys yourself is removed and it’s generally simpler with a 3rd party that specialises in Bitcoin security.
On the flip side of the orange coin, if the company that you’re using goes under or becomes rogue, then getting the private key required to spend your Bitcoin becomes impossible.
This would mean that you will never have full access to your Bitcoin and you essentially have lost coins, which sounds like a worse nightmare!
Therefore due diligence on the company you use to help manage your multi-sig is important, checking on their track history, reputation and all-round approach to Bitcoin security.
Which Companies Provide Managed Multi-Sig Services?
|Blockstream – Green Multi-sig Shield||https://www.blockstream.com/green/|
|BitPay (custodial) – CoPay multi-sig wallet||https://bitpay.com/|
|BitGo – Self-managed custody||https://www.bitgo.com/a>|
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