The recent $625M Axie Infinity hack, the largest till date, has several lessons for everyone in the crypto industry, with the most obvious being stronger operational security controls. Without getting into details, Sky Mavis (Axie's parent company) had only 9 validators for their Ronin side chain, and 5 got compromised, meeting the 5-of-9 threshold set for transaction approvals, and allowing the hackers to exfiltrate funds (ETH and USDC) on behalf of the rest. While the mechanics of the hack are not of interest today, I want to talk about the 5-of-9 (generically, m-of-n) signing approach used - a multi-signature scheme.
A multi-signature wallet (multisig for short) is one where, instead of an account, a group of accounts are required to approve wallet operations. The concept isn't new, and is based on the well-known security principle of split control. The goal is to eliminate a single point of failure, whether it's via a human error, insider breach or external compromise. To defeat such a system, you would require collusion between multiple parties or a system-wide compromise. Either way, it is generally better than relying on the operational security of an individual.
FWIW, other approaches like multi-party computation (MPC) are also gaining popularity, so multisig may not be the only game in town for long. That said, let's look at a few popular multisig wallet options today. I won't cover paid/institutional custody options like BitGo, Casa etc in this post though.
Armory Wallet for Bitcoin
Bitcoin was the first blockchain to benefit from multisig wallets. Electrum was one of the first wallets to support multisig and is probably the most lightweight of all, but several other options are now available, Armory being one of them. Armory is a full node, open-source Bitcoin wallet with both cold storage and multisig support. It uses a deterministic wallet; all addresses are derived from the same root. Armory is designed conservatively, with a primary focus on security, evident from the choice of cryptographic schemes adopted. If you own large amounts of Bitcoin, you'll want to consider semi-custodial solutions, else Armory should work just fine.
Gnosis Safe for Ethereum
Gnosis Safe is the most popular multisig wallet for Ethereum, period. The core smart contracts are open-source and formally verified, which is generally a very high bar for security. You can create and access a safe directly from your browser, but Gnosis is also available as a desktop (Windows, MacOS, Linux) and mobile application (iOS, Android). It supports Ethereum (Mainnet, Rinkeby), xDai, Arbitrum, EWC, Volta, Polygon and BSC blockchains, and works with a wide range of wallets, including MetaMask, Ledger, Trezor and others. It supports non-fungible tokens (NFTs) and seamlessly integrates into popular decentralised finance (DeFi) protocols to trade and manage digital assets.
Cashmere Wallet for Solana
Cashmere is a platform to create and manage multisig wallets for digital assets on the Solana blockchain. Cashmere is relatively new, without a lot of documentation, community or a roadmap, and it's unclear whether the smart contracts have been audited, so do exercise caution. They were part or Y Combinator's most recent cohort (YC W22) though, lending some credibility to the team. See this post for a brief guide on setting up a Cashmere multisig wallet.
Multisig Safe for Harmony One
Harmony Multisig Wallet is a platform to create and manage multisig wallets/safes for digital assets on the Harmony One blockchain. It allows you to connect existing MetaMask and 1Wallet wallets, and is based on Gnosis Safe smart contracts. See this post for a brief guide on setting up a Harmony multisig wallet.
Argent Vault for Ethereum
In 2021, Ethereum founder Vitalik highlighted some failings of multisig wallets, from technical complexity to usability gaps for widespread adoption. He offered an alternative - a social recovery wallet. Under normal circ*mstances, the wallet functions like a multisig wallet. If a user ("guardian") loses a key, they reach out to the other users (ideally, folks in your social circle) and ask them to sign a special transaction to replace the lost key with a new one. Vitalik's post goes into more details, especially touching upon the subject of trust in such a recovery scheme.
The most popular social recovery wallet available today is Argent. It is open source, well audited and does away with the seed phrase, a frequent source of wallet compromise. It supports two-factor authentication using phone and email, and enforces a 36 hour delay for a guardian change to come into effect, giving you a critical window to lock your wallet in case of a compromise.
A multi-signature wallet is a cryptocurrency wallet that requires multiple signatures — instead of just one — to execute each transaction. The signatures are associated with different cryptographic private keys, while a defined threshold of keys must sign a transaction to validate it.
For example, a 3-3 wallet is a multisig wallet that is shared by three people and requires three signatures to sign a transaction. A 2-3 wallet is a multisig wallet that is shared by three people and requires two signatures to sign a transaction. You may also see “2 of 3” to indicate the number of copayers needed.
Multisignature crypto wallets can be distinguished by the number of existing private keys and the number of signatures required to authorize a transaction.
But with a multisig wallet even if one private key is compromised it's useless to the thief without the others required to sign a transaction, which means less risk of stolen funds. Multisig wallets also help protect against funds lost due to misplacing your seed phrase.
Security is the biggest advantage of multisig wallets. Users can ensure the security of their assets at all times and evade thefts or hacks just by keeping their crypto on a multisig wallet. A user who utilizes a 2-of-3 keys configuration and is infected with malware on one particular device cannot lose funds.
The multisig vault is created by intelligently distributing three keys, two of which are required to unlock your funds. Coinbase securely stores one key, you store a backup user key, and both Coinbase and you store an encrypted third key, which can only be unlocked with a password you know.
Is MetaMask a multisig wallet? No, MetaMask is a single-signature wallet by default. However, it can interact with multisig wallet smart contracts to facilitate transactions.
Multisig stands for “Multi-signature,” a particular kind of digital signature that enables two or more people to sign a document as a group. This adds an additional layer of security to your wallet compared to a single signature wallet which can easily be hacked.
The obvious advantages of having multiple signers are to reduce single points of failure and increase redundancy in your setup. With the help of the common examples of attacks on multisig included below, I will explain why those attacks are applicable, even with singlesig custody.
We chose Trezor as best for security because it comes with the strongest security features and track record of any reviewed hardware wallet. Trezor, like Ledger, is a name synonymous with crypto cold wallet storage.
The digital wallet stores credit and debit cards in one place. All user data is safe in these digital wallets. Adding a card to the system takes only a few minutes: it will be enough to download the application to the device and select the desired card in the "Cards" tab.
Using a multisig wallet also reduces dependence on one party as co-signers can step in if something happens. Ultimately, this is a disadvantage of multisig wallets at the same time. If the entire group of signers decides to commit a fraudulent transaction, it may prove very difficult to get funds back.
Perhaps the biggest disadvantage of multisig wallets is the lack of a custodian. Let's go back to the bank analogy. If you have a joint account with another person who takes all of the funds out of the account unexpectedly, you have legal recourse. The bank is the custodian of the funds.
Multi-signature wallets require a pre-determined number of signatures to execute a transaction. MPC wallets do not require multiple signatures but instead use a distributed key generation process that ensures no single party has complete control over the wallet.
Coinbase Wallet is a self-custody wallet that gives you complete control of your crypto. This means that the private keys (that represent ownership of the cryptocurrency) for your Wallet are stored directly on your mobile device and not with a centralized exchange like Coinbase.com.
Important: Assets in Coinbase Wallet are not held by Coinbase. When you use Coinbase Wallet, your crypto is sent to a decentralized exchange that is not controlled by Coinbase.
You can connect up to 10 wallet addresses from different providers to your Coinbase NFT account, however you can only use one wallet at a time as your default wallet. The default wallet is the wallet you use to sign in, and complete transactions such as buying and selling NFTs.
In a multisig transaction, at least two signatures are required to approve the transaction between three addresses; for example, in a Bitcoin transaction, the two signatures would be the sender (in other words, the person spending his or her bitcoin) and a second private key.
Multisignature wallets (or multisig, for short), are cryptocurrency wallets that require two or more private keys to sign and send a transaction. The storage method requires multiple cryptographic ... We can safely confirm that the answer is yes .
To create a multi-signature wallet, make sure to connect an existing wallet on the Solana network on the top right corner and then click Create Wallet. Make sure you have at least 0.12 SOL in your wallet to pay for the fee during wallet creation.
MetaMask is a flexible tool that can be used in numerous ways. One facet of this is that there's nothing stopping you from using MetaMask on multiple devices, with multiple Secret Recovery Phrases and private keys.
After logging in to MetaMask, and selecting the desired MetaMask account, and reloading the page, I click on the “New Wallet” button: Now I enter a name for the new wallet — I chose “Biz Expenses”, and I enter the Ethereum address of each of the partners.
A cold wallet is a type of cryptocurrency wallet that securely stores your private crypto keys offline, usually on a physical device. It's also known as a hardware wallet, and it protects your digital crypto assets from online hackers by using a flash drive-like device that isn't connected to the internet.
Because multisig wallets require multiple signatures from a number of participants in order to complete a transaction, they are able to eliminate key person risk and mitigate any single point of failure.
Sparrow is a Bitcoin wallet with a focus on security, privacy and usability. Sparrow supports single and multisig script types, connects to an Electrum server or Bitcoin Core, interacts with popular hardware wallets, provides full coin and fee control, and contains a transaction editor and a blockchain explorer.
Safe (formerly Gnosis Safe) is a multi-sign wallet running on multiple networks, which requires a minimum number of users to approve a transaction before execution. Businesses and individuals can use multi-sig wallets to manage assets safely, perform sensitive transactions, and achieve redundancy.
Digital wallets use technology to keep your financial data and personal information safe. However, they can still be vulnerable to hackers. But taking extra precautions, like using stronger passwords and monitoring your accounts often, can help protect your money and private data.
Digital wallets use one of the more secure payment methods available: tokenization. Your information is heavily encoded — so much so that if a retailer gets hacked, your credit or debit card number won't be compromised.
The least secure wallets are any hot wallet, or one that has a connection to another device or the internet. For security purposes, you should never store your keys on a device that has a connection that is always on or accessible. If it has a connection and an application is used to access your keys, it can be hacked.
If you're looking for a high-quality wallet that will last you for years, you should consider buying a full grain leather wallet. Unlike other types of wallets, full grain leather wallets are made from the highest quality materials and are designed to withstand everyday wear and tear.
Arguably, the safest way to store crypto is a hardware wallet. But as Marie explains, the effectiveness of cold storage depends on its careful use. “Hardware wallets are physical devices that securely store the private keys to your cryptocurrency addresses offline.
In a multisig transaction, at least two signatures are required to approve the transaction between three addresses; for example, in a Bitcoin transaction, the two signatures would be the sender (in other words, the person spending his or her bitcoin) and a second private key.
Google Pay and Apple Pay are examples of more well-known digital wallets. Both services allow you to access your financial products through your devices and to make purchases.
One of the benefits of using MetaMask is that you can use your Secret Recovery Phrase to access your wallet on multiple computers or smartphones. You're not bound permanently to any single device. To access your wallet on a new device, use your Secret Recovery Phrase to restore your wallet.
After comparing Trezor Model T vs MetaMask, it's clear that MetaMask has the higher number of supported crypto with 2 cryptocurrencies available, while Trezor Model T supports 1000+ different cryptocurrencies.
The incident occured in March 2022. According to the blog post, the fake Trezor wallet allowed fraudsters to steal Bitcoin (BTC) via a replaced microcontroller, which enabled attackers to take over control of the user's private keys.
Introduction: My name is Rueben Jacobs, I am a cooperative, beautiful, kind, comfortable, glamorous, open, magnificent person who loves writing and wants to share my knowledge and understanding with you.
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