A multi-sig, short for multi-signature, wallet refers to an account that needs more than one signature to control the assets. This can improve security by reducing the risk of a lost signature, and also by requiring an attacker to gain control over more than one signature.
This post covers what they are, why they're popular, and how Argent has developed the concept even further.
What is a multi-sig?
The concept of using multiple keyholders to enhance security is much older than crypto. For instance, you may have seen war movies where multiple keyholders are required to trigger some sort of defense system. The idea is simple; eliminate a single point of failure by distributing control.
The same logic applies in crypto.
Commonly, multi-sigs are described as being "x-of-y", where any x signatories out of a possible y are required to move the money. For instance, the Ethereum Foundation employs a 4-of-7 multisig wallet to store its funds. This means a majority comprising any 4 of the 7 total keyholders are required to make a transaction.
Why are multi-sigs popular?
Many important smart contracts and large crypto funds (including the wallets used by exchanges) are set up as multi-sigs. This way, trust can be distributed amongst a number of key-holding parties. Some common combinations and their applications are outlined here.
However, just because multiple signatures are needed does not mean that multiple people are needed. You could have control over multiple addresses, and a contract could require you to approve a majority from these addresses to make transactions.
If set up with redundancy, this could mean that as long as you have access to some (but not necessarily all) of the controlling addresses, you have control over the associated contract.
Limitations, and the "emerging better alternative"
There are a few limitations of multi-sigs. Firstly, there is a good deal of technical knowledge required to set one up, as well as keeping the associated private keys secure. Additionally, it has not yet legally established in most places who is the legal custodian of funds placed in a multi-sig. If you ended up getting into disagreements with any of the other individuals involved you may have trouble getting the other keys back.
Vitalik Buterin, creator of Ethereum, has outlined his thoughts on why he believes smart contract wallets with social recovery methods are an "emerging better alternative" over traditional multi-sigs. One major issue with multi-sigs, particularly for the individual, is usability. Firstly, transactions now require confirmation from multiple devices, making the whole process far more complicated. Furthermore, there are security considerations - if someone can steal one of your devices it's likely your other is in reach as well.
This is why we created Argent, to provide users with the safest and easiest way to store their crypto assets. Argent is a smart contract wallet, with it you can assign guardians who can approve transactions, and help you to recover your wallet should you ever need to. The number of guardians needed for certain actions is available here. Unlike with a multi-sig, with Argent you can revoke or add guardians at-will, with a short security period where you can confirm or cancel the action.
These guardians can include friends, family, and/or other hardware wallets or addresses you control. A majority of guardians is required to approve transfers to non-trusted contacts. Giving you both freedom and best-in-class security.
You can read more about how we designed Argent for security and ease of use on our blog here.
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