Crypto glossary

Multi-Signature

Multi-signature, or multisig, is a security setup in which a transaction needs approval from several private keys instead of one, for example any 2 out of 3 designated keys, so no single key can move the funds alone.

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How multisig works

A multisig wallet is defined by two numbers, written m-of-n: there are n keys in total, and at least m of them must sign before a transaction is valid. In a 2-of-3 setup, any two of the three keys can approve a payment, and one key on its own can do nothing.

On Bitcoin, multisig is built into the scripting system and has been widely usable since 2012. On Ethereum and similar networks, it is usually implemented with a smart contract wallet, such as Safe, which checks the signatures before executing a transaction.

An example

Say you hold savings in a 2-of-3 multisig. One key is on a hardware wallet at home, one on a second hardware wallet at a relative's house, and one with a backup service. If your home device is stolen, the thief cannot spend anything with one key, and you can still move the funds with the other two. If you lose one key, you can recover the same way.

Where it is used

Multisig protects individual savings, company treasuries where several people must approve payments, DAO treasuries, exchanges' cold storage and many cross-chain bridges. It removes a single point of failure and makes insider theft harder, because one person acting alone is not enough.

Risks and common mistakes

Multisig only helps if the keys are truly independent. Keeping several keys on the same device, in the same place or with the same person recreates a single point of failure. Losing too many keys, for example two out of a 2-of-3, locks the funds permanently.

Signers can also be deceived. In February 2025, attackers took roughly 1.5 billion dollars' worth of crypto from the exchange Bybit after the signers of a multisig cold wallet approved a malicious transaction shown to them through a compromised signing interface. Verifying what each transaction actually does, rather than blind signing, matters for every signer. Smart contract multisigs add contract risk, and setups need careful documentation so heirs or colleagues can recover funds.

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Frequently asked questions

Is multisig safer than a single hardware wallet?

It removes the single point of failure, but adds complexity. It is safer only when the keys are kept independently and the setup is well documented.

What does 2-of-3 mean?

There are three keys, and any two of them are needed to approve a transaction.

Does multisig cost more in fees?

Often slightly, because transactions carry several signatures or interact with a contract, which uses more data or gas.

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All glossary terms · Educational reference only — not investment, legal, tax or financial advice.