Introduction to Bitcoin Multisig Wallets
• Bitcoin multisig wallets are a great security aid in a self-custody practice and have existed since 2012.
• DIY wallets also exist for extra security, allowing users to build their own device that securely generates private keys.
• There are two types of Bitcoin multisig wallets: collaborative custody wallets and self-custody wallets.
Collaborative Custody Wallets
Collaborative custody wallets involve the use of a third party to manage one of your private keys, usually offering 2-out-of-3 key management. The advantage of such a solution is convenience and reliance on customer service if anything happens, however this comes at the expense of privacy as companies may require KYC procedures to allow customers to use their services. Another disadvantage is geographical limitations as they may not be available everywhere globally.
Self-custody wallets involve managing the distribution of private keys alone, providing complete control over funds in order for optimal security for users. This type of wallet requires more technical knowledge than collaborative custody wallets but offers greater protection against theft or loss with no reliance on third parties or geographical limitations. Examples include hardware wallets such as Ledger, Trezor and KeepKey, as well as DIY devices such as Casa Node and Boltzmann Node.
Bitcoin multisig wallets provide an excellent way to store digital assets securely with either collaborative or self-custody solutions depending on user preference. Although there are some tradeoffs between convenience and privacy when it comes to using collaborative custody solutions, self-custody solutions offer maximum control while minimizing risk without the need for third parties or geographical restrictions.
Multisig technology can make bitcoin storage more secure without sacrificing user experience while protecting users from potential hacks, phishing attacks and other online threats that could lead to loss of funds with no chance of recovery. Self-custodial solutions provide maximum control over funds while reducing risk without relying on third parties or geographical limitations – making them ideal for those who want the highest level of security for their digital assets.