I wasn't able to find a beginner's guide to creating a MultiSig Electrum Wallet, so I'm going to try to explain how it goes here.
This is the first time I've ever created a multiSig wallet, so I'd appreciate your feedback.
This guide will be specifically tailored to a 2 out of 2 solution, but I think you can easily extrapolate it to any other M out of N signature wallet.
Why would you want to create a MultiSig Wallet?For one, it improves security. You need both signatures for any outgoing transaction, so if one of the wallets gets compromised, the other hopefully won't be and this may save your coins.
You can install 2 wallets on 2 different computers by yourself, without any other person involved. In this case, you will control both private keys. This is what I did in this guide.
Of course, you can create this multisig solution together with someone else, for example, with your spouse or friend. In that case, you will control just one of the private keys, while your spouse the other. However, this is NOT the best idea if you ask me, considering how a good marriage (or friendship) may turn sour very quickly.
Multisig wallets are probably the most useful in various business endeavors, where several partners (cosigners) control mutual funds by holding one of the several keys necessary to unlock the funds. Exchanges store the majority of their coins off-line in multisig wallets as well. Some exchanges, like
Bitmex, use 2 out of 3 multisig solutions for all customer funds all the time. So there is no doubt that multisig wallets are very useful.
For the purpose of demonstrating this concept (and because I won't use this wallet in real life), I selected my normal PC to install
Wallet 1.
Wallet 2 was installed in a virtual machine [Linux]. (You can also use a hardware wallet as
wallet 2 Ref. [1].)
1) Start the Creation of Wallet 1This section is essentially just to get the
seed and
Master Public Key of Wallet 1. We will stop the creation of Wallet 1 half way down the road, to return to it after creation of Wallet 2.
1. Choose
New/Restore![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F1cBDkag.jpg&t=665&c=Luje3tEA5Spr6Q)
2.Give it a name
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FKm0nOoB.jpg&t=665&c=qNEtaG6bT4oyjg)
3. Choose
Multi-signature Wallet![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FxUzaGlg.jpg&t=665&c=pGlr94rsNjejug)
4. Choose the number of signatures
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FQBW5w42.jpg&t=665&c=2SLM6D6g9FJtOg)
The first slider indicates the total number of cosigners (wallets). The second slider indicates how many of them are needed for signing. We have here 2 of 2.
If we wanted to create a 2 out of 3 multisig wallet, it would look like this:
https://i.imgur.com/N8CqQre.jpg5. Choose
Standard![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FuXrXWMM.jpg&t=665&c=zuXpigotJ6rJUA)
6. Write down the
seed and store it somewhere safe. Remember, this is equivalent to your private key. Don't share it with anyone.
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F4qBc1b7.jpg&t=665&c=rmsD_NK15XS1Dg)
7. Next comes the
Master Public Key (MPK)![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FSUQkhqr.jpg&t=665&c=CW4V5IGNrW_pKw)
The MKP starts with xpub... You should save the MPK in a file and transfer it to the other computer. This is the only thing you should share with your cosigners in case you are creating MultiSig Wallet with someone else.
8. Now it asks for cosigner's info
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FqQsihan.jpg&t=665&c=cciC_KY_ibBcHw)
You can stop here, because you don't have the MPK of wallet 2 just as yet. Just abort the creation.
Two important things are:
a) we have our seed of wallet 1 written down
b) we have our MPK of wallet 1 saved in a file
2) Start and Finish the Creation of Wallet 2In this step, we go to the second computer and pretty much repeat the steps as for Wallet 1. But now, since we know MPK of wallet 1, we can finish the creation of wallet 2.
For example, we start here:
1.
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FXl4joUZ.jpg&t=665&c=wpnSNbUM92k0pw)
....
we write down the
seed of Wallet 2, and save the
MPK of wallet 2 in a file
....
and follow the steps as in the previous chapter to this point:
9.
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FbjqSxg5.jpg&t=665&c=NYaRT2qFB-eESQ)
Here we enter the
MPK of Wallet 1 saved from earlier.
This concludes the creation of Wallet 2. You can go to Addresses tab and something like this will appear.
3) Finish the Creation of Wallet 1We go back to the first computer and finish what we have started with Wallet 1.
Choose
I already have a seed![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2Fd5LDbXa.jpg&t=665&c=guRtUKQxln83aA)
enter the seed of wallet 1, and then enter MPK2 when asked for it in step 8.
When the creation of Wallet 1 is completed, compare the addresses. They should be the same as in Wallet 2.
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FjIKpyk4.jpg&t=665&c=LDunAtzOpS4n1Q)
Notes- The fact that the addresses are equal, means that you now have a working 2 out of 2 multisignature wallet.
- Anyone can send you coins to one of these addresses. You should learn how to spend coins from this type of wallet, as described in Ref [2].
- The seed is virtually identical to your private key. Keep it safe. In this guide we own both private keys, so we should probably store them in two different physical locations. For example, you can use a bank's safety deposit box as one of these locations, as indicated in the post of @pooya87 below.
- If you create a multisig together with someone else, never show them your seed. If you do, they will have full control over the funds.
- If you create a multisig together with someone else, give them only your MPK. You should also receive their MPK.
- If you create a multisig together with someone else, show your MPK only to them. If you share it with a third person, they will know all your addresses and you will potentially lose your anonymity/privacy.
References[1]
https://freedomnode.com/blog/109/how-to-create-and-use-a-multi-signature-wallet-with-electrum-and-trezor[2]
http://docs.electrum.org/en/latest/multisig.html