• Multisignature security, or “multisig”, offers a different set of security guarantees than single-signature (singlesig) solutions.
• Multisig wallets talk to multiple signing devices and coordinate between them for signing transactions, while singlesig wallets talk to one signer only.
• Multisig can minimize trust in any one entity and is recommended for long-term HODLing where regular transactions are not anticipated.
What Is Multisig?
Multisignature security, or “multisig,” offers a different set of security guarantees than single-signature (singlesig) solutions cannot. It is basically a wallet that can talk to multiple signing devices and coordinate between them for signing transactions (generally using the PSBT format). In comparison, a singlesig wallet talks to one signer only. The singlesig wallet is also often the signer, meaning the keys are hot. An output descriptor or bitcoin secure multisig setup (BSMS) is a format that is used to define the configuration of a multisig.
Advantages Of Using Multisig
The obvious advantages of having multiple signers are to reduce single points of failure and increase redundancy in your setup. With multisig, you can minimize trust in any one entity as multiple entities are involved.
Considerations For Bitcoin Custody
Setting up and using multisig can be operationally more time consuming and include more pitfalls if not done correctly. Therefore, I recommend that users only consider multisig for long-term HODLing, where regular transactions are not anticipated. A robust multi-vendor multisig solution may also incur setup costs depending on your choice provider(s).
Conclusion
In my opinion, anyone holding a non-trivial amount of bitcoin for the long term should evaluate a multisig option over singlesignature solutions due to its enhanced security measures and ability to minimize trust in any single entity. However it should be noted that setting up and using mutlisg requires operational effort and may incur setup costs depending on the provider(s) chosen by users.
Takeaway
Multisiugnatures offer enhanced security measures such as reducing single points of failure and increasing redundancy but come with additional operational efforts required from users compared to singlesignature solutions when setting up custodial services for their Bitcoin holdings