Multisig

Multisig, short for multi-signature, is a wallet setup that requires more than one private key to approve a transaction. A common arrangement is 2-of-3: three keys exist, and any two of them must sign before funds can move. This removes the single point of failure that defines ordinary wallets, where one compromised or lost key means total loss.

For example, a small crypto business might hold its treasury in a 2-of-3 multisig where the founder holds one key on a hardware wallet, a co-founder holds another, and a third is kept in a bank vault as backup. A thief who steals any single key gets nothing, and if one key is lost the remaining two can still recover the funds. On Ethereum, multisig is usually implemented with smart contract wallets such as Safe; on Bitcoin it is built into the script system.

Multisig is standard practice for organizations, DAOs, and larger personal holdings, and exchanges use similar schemes internally. The main costs are complexity and coordination: transactions take more steps, and a poorly planned setup where multiple keys are stored together defeats the purpose. A common misconception is that multisig is only for institutions; individuals increasingly use it to protect against both theft and their own single mistakes.