Multisignature wallet is the best wallet setup to safeguard funds.

[Ashawowo(OS)]

For those new to the setup, Multi-signature wallet is a wallet setup that requires a number of cosigners(M of N) to validate a transaction for spending. In other words you need to provide the number of required private key signatures called the threshold to broadcast your transaction to the mempool. If you cannot provide the required number of signatures, you cannot proceed with spending the coins.

In recent times, we've observed lots of wallets hacked and one notable thing is that those who use multi-signature setups were not immediately affected and had the chance to move away their funds to safety.

Let's look at the 2 popular non-custodial wallet compromises as an instance:

ColdCard incident: Hackers were were able to reconstruct the generated seed phrases which was done with a flawed pseudo-random number generator (PRNG) instead of the hardware-based random number generator(RNG), which resulted in the loss of more than 1,800 BTC.

Those affected immediately: those who used single signature setups and those that used single signature and weak passphrase. I followed an X account that saw his two and three word passphrase-protected experimental wallet setup wiped in days.

Those not immediately affected: Those who added a strong passphrase and those with multi-signature setup.

Ledger reseller supply-chain implants: Hardware implant were discovered in wallets sold from an approved reseller cryptobilis of which the implants were able to steal credentials and transmit to the scammer over embedded e-sims which led to the loss of over $90 million worth of coins.

Those affected immediately: Those who used seed phrases and those that used seed phrases + passphrases.

Those not immediately affected: Those with multi-signature wallet setups as they were able to migrate their funds when single signature wallets were being actively drained.

Multi-signature wallets makes it more difficult for scammers and hackers to provide appropriate combinations (M of N) that can authorize funds to be spent from a wallet with such setup, making it a lot immune to immediate drain from a wallet hack or scam activity, provided the victim didn't personally hand over the applicable seed phrases to spend the coins. It is very important to have this setup for your major holding.

The downside people often cite is that multi-signature setup requires more fees to spend your coins, but I believe paying more fees is cheaper than loosing everything.

[KingsDen]

I have known about multi-sig wallets for long but it was o_e_l_e_o that taught me the practical usage of it. It was funny to me how I didn't realise I could do a 2/2 or 2/3 multi signature wallet myself.
As read, I had thought that I only needed a multi signature wallet for business deal, between family members or co-owned funds. But some years back oeleo told me I can do it with different devices of mine and I was able to set it up and it was a beautiful experience. I don't remember while I stopped using that method to save my BTC.

I also don't know why it's still not yet popular among bitcoiners. A properly set up multi-sig wallets will mitigate against some risks such that a properly set up air-gapped device will do against some hardware wallets.

The downside people often cite is that multi-signature setup requires more fees to spend your coins, but I believe paying more fees is cheaper than loosing everything.

How often does one move funds from a long term private wallet. The wallet should be used for long term holdings while a separate one for everyday transactions.

[Antidote47k]

For someone holding a significant amount in his wallet, multisig is definitely worth considering, cause it reduces the reliance on a single key. One thing you shouldn’t make the mistake of doing is to storing all the keys together. The reason it’s considered safer in the first place is the fact if one key is compromised, an attacker would still need another key for them to be able to spend and when they are stored together, the aim is defeated.
 
Recovery also matters, you need a reliable way to be able to recover the wallet configuration and locate the funds and not just the seed phrases, which some people might find more complicating but that’s the price for the extra security so to say…. The only drawback is that some people might not be comfortable or be able to main the added complexity. It’s a strong security measure but only when both the setup and recovery process are properly understood.

[Charles-Tim]

Multisig wallet is the safest among them all and it can be on a cold wallet. But it is still very important to avoid hackers because Bybit hack was multisig.

The downside people often cite is that multi-signature setup requires more fees to spend your coins, but I believe paying more fees is cheaper than loosing everything.

Taproot would have solved this, but I do not know the reason only singlesig Taproot are publicly available.

[hugeblack]

This entirely depends on setting up a multi-signature (multisig) wallet correctly; any configuration error such as forgetting to back up the wallet descriptor/configuration file or failing to back up the extended public keys could result in the total loss of your funds.
Furthermore, one must avoid keeping all the keys on the same device, using cloud storage, or in the same physical location.

[ryzaadit]

I still go to the classic mode.

Make a cold wallet air-gapped with a device like an iPhone and never connect it to the internet. People who always try to advertise multi-signature don't realize these things are very complicated, and someone who is not experienced with it can potentially lose their money because the money is locked (can't be spent). With multi-signature, you have more keys to handle, more backups needed to be handle, and more responsibility. You don't experience with it; my advice: don't use it.


I still Preferred cold-wallet air-gapped:

• Buy a device like Iphone/Macbook fresh from official.
• Make it offline from day one.
• Create your wallet offline.
• Add your own entropy and make sure it has some complexity.
• Make your watch wallet to another device.
• If you use Electrum as example, for Sign & Broadcasting transaction you can tried to export the file TX with QR. I photo with my phone after preparing and created a transaction from watch wallet, and use my camera Macbooc for scan the QR to be sign offline without any transfer file connected to my device like USB.

Just saying my two cents Multi-signature is always great, but for someone who are really experienced (always double-think you use these) before set up.

[Aanuoluwatofunmi]

Multisig wallet is still one of the best, but for maximum privacy I will go for Bitcoincore, having a 2 or more cosigners increases the wallet security, and this makes it nearly impossible for a transaction to be signed when there is a security bridge, except with the consent of other cosigners involved. Wallets with 2fa in this manner have a high security standard and cannot be easily hijacked by scammers to perform a transaction.

[Lucius]

~snip~
I still Preferred cold-wallet air-gapped:

Buy a device like Iphone/Macbook fresh from official.
Make it offline from day one.
Create your wallet offline.

Just saying my two cents Multi-signature is always great, but for someone who are really experienced (always double-think you use these) before set up.

Isn't it a bit too expensive to buy such devices when the same thing can be done with an old computer? In addition, mobile phones, even if they have never been online, may still have something in them that could give them the ability to communicate remotely without the user's knowledge. It's much easier to disassemble an old computer and remove the Wi-Fi and BT modules than it is to disassemble and reassemble a mobile device.

Multisig is definitely something that provides an extra level of security, but for most of those who own cryptocurrencies, it is still a complicated thing that they avoid or don't even know exists.

[ryzaadit]

Isn't it a bit too expensive to buy such devices when the same thing can be done with an old computer? In addition, mobile phones, even if they have never been online, may still have something in them that could give them the ability to communicate remotely without the user's knowledge. It's much easier to disassemble an old computer and remove the Wi-Fi and BT modules than it is to disassemble and reassemble a mobile device.

Yap, an old computer can still be considered.
Of course, it always depends on the user. If I have more money, especially a huge stash of assets, I am willing to spend more on a new device, but an old device can also be considered for the user's situation.

Multisig is definitely something that provides an extra level of security, but for most of those who own cryptocurrencies, it is still a complicated thing that they avoid or don't even know exists.

Agree, Bitcoin or cryptocurrency is already complicated for some of them too. These is why, Multi-sig is just not for everybody.

[Zaguru12]

Furthermore, one must avoid keeping all the keys on the same device, using cloud storage, or in the same physical location.

I think this is one point that most users looking to use multi sig wallet needs to look into, aside not keeping keys on the same device I do think that another major factor should be never generate the multi sig seed phrase or keys from one devices, each co-signer should be assigned to each different device most especially if the wallets uses CSPRNG to generate seeds or keys.

Or a mix of airgap devices and probably hardware wallets so as to avoid a single point of failure in case the devices gets infected with any malware. It is also best to not back up the keys and descriptors in one place.

I think this is one of the major concern that many people have and then sticks to single sig and just add pass phrases as extra layer of security

[bitbollo]

Coldcard incident would be not avoided using a multisignature setup. Its the strong passphrase that would make the difference and some of multisignature where exploited too.
hardware wallets can be definitely not used / don't need to be see as essential for a safe storage of funds.
multisignature as the best solution? What I had to choose between a 3-of-5 or a 2-of-3 or any other variant?
There is no a "best" solution. Anyone could have a specific need (like inheritance) for creating such setup. You can just split coins into more addresses...using timelock or the blockstream (greenaddress) solution that would move the funds for you after xxxx blocks.

As a basic read I would suggest to have a look in glacierprotocol and relative "easy" solutions that would not requires more than one key.
As mentioned, it would be just enough for achieving security it would just one key/software/ airgapped machine/usin new item once signing a transaction.

[Hypnotizer]

~
The downside people often cite is that multi-signature setup requires more fees to spend your coins, but I believe paying more fees is cheaper than loosing everything.

I believe that isn’t the only downside.. for an average bitcoin or crypto user, I believe the complications for the initially setup and the added responsibilities that comes with using MultiSig are also downsides.

Apart from that, if someone can learn how to properly set it up and safely manage the security of the added keys then it’s a good decision especially for a wallet that will store a stash for long-term.

It’s also important for beginners or anyone who decides to use MultiSig to know that it doesn’t automatically means your wallet is completely safe from compromise, you need to be due diligent and active to move the coins incase of a bad day..

[Frankolala]

Why I like multisig wallet is because it has the highest level of security as you can use two different wallets for the cosigner. Which means that if one wallet has a bug and got compromised, your funds are still save because the other wallet does not have a bug. However, it's very technical to set up and a little mistake can cost you the lost of your fund. I prefer using Electrum cold storage where the keys are generated offline and add a strong passphrase to it.

Multisig is good for companies or for bitcoin inheritance plan.

[Mahiyammahi]

I still go to the classic mode.

First thing got in my head was this. Even though multi SIG is more secure it's also more pain and trouble we had to take. Since I've not much enough funds on my wallet , I would also go for the traditional way.

If my wallet holds millions I would have think about it👀. Although it doesn't matter if any breach has been done , hacker don't treat ur wallet as millions or penny . They transfer everything they could. So even a penny could be lost.

[Basels]

Setting up a multi-sig wallet is one thing, but setting it up incorrectly would only result in having a false sense of security. If we take the Colcard exploit as an example, the hackers swept even some multi-sig wallets that were vendor specific. The reports say that only multi-vendor multi-sig wallets held up against the heist. So those wallets that Coldcard alone met the signing threshold were drained. So AFAIK, taking a cue from Coldcard, multi-sig can only be considered impervious if at least one key was generated from a different vendor.

[_act_]

Make a cold wallet air-gapped with a device like an iPhone and never connect it to the internet. People who always try to advertise multi-signature don't realize these things are very complicated, and someone who is not experienced with it can potentially lose their money because the money is locked (can't be spent). With multi-signature, you have more keys to handle, more backups needed to be handle, and more responsibility. You don't experience with it; my advice: don't use it.

There is nothing complicated about multisig, and not necessary to use it for making frequently transactions, you can have an online wallet for that where you can have little amount of money for frequently transactions.

Multisig is not complicated so far you know that all your private keys and public keys or m of private keys and n of public keys are very important and must not be lost.

[pawanjain]

Multi sig wallet is indeed a good mechanism to secure your crypto holdings if you are unsure of which storage method to chose from.
We have seen hacks with hardware wallets in the past but never have I ever heard of a multi sig wallet getting compromised.
But then again, it depends on how good the keys are stored in a multi sig wallet, its pointless if all keys are stored at the same location.

[FirmWars]

Why I like multisig wallet is because it has the highest level of security as you can use two different wallets for the cosigner. Which means that if one wallet has a bug and got compromised, your funds are still save because the other wallet does not have a bug. However, it's very technical to set up and a little mistake can cost you the lost of your fund. I prefer using Electrum cold storage where the keys are generated offline and add a strong passphrase to it.

Multisig is good for companies or for bitcoin inheritance plan.

And what's that mistake? That a person will be so foolish to send all their Bitcoin into a newly setup multi signature wallet without first testing it with a small amount of Bitcoin before finally sending all Bitcoin into the address? This is the fear that is stopping some people from using multisig.

Your last statement is also another reason why some people are not using multisig, they believe that such form of security is not for a retail investors but only meant for companies. Who said so?

[Mrbluntzy]

Thanks for beating me to it , this is exactly the same subject I have been working on but not enough time to finish it. I think the importance of multi-signature wallets is not being too emphasized on. Maybe it was less important before for an ordinary individual and was mostly used by crypto companies like exchanges and casinos, but that has to change because scammers are not joking now. We can see how they have been using more advanced tools to compromise investors' wallets and steal their funds. If we don't also use more complex security measures, then we only make the task easier for those hackers.

One thing I learned from o_e_l_e_o is his emphasis on the security of our Bitcoin. One should not think that because the process of a security measure is too complex, they should leave their Bitcoin in a very simple security setup that can be easily compromised. Losing your Bitcoin is worth more than the stress it will cost you to just learn how to set up your multi-signature wallet, generate the keys on different devices, and keep them safe. By doing that, you have more security than someone using just normal self-custody.

[Livingleged]

This entirely depends on setting up a multi-signature (multisig) wallet correctly; any configuration error such as forgetting to back up the wallet descriptor/configuration file or failing to back up the extended public keys could result in the total loss of your funds.
Furthermore, one must avoid keeping all the keys on the same device, using cloud storage, or in the same physical location.

This is my main fear about multi signature set up. I’ve been seeing a lot of posts about it and i intend to have a 2-3 multisig setup on my Wallet also, but the complexity involved and fear of not making a mistake and losing some funds have left me out, I think I’m just going to try it with a wallet that has just small amount and test run it. can some help me with any thread that can help me understands how to setup the multisig wallet.