Multisig (multi-signature)

With a normal wallet, one private keyGlossaryPrivate keyA secret, randomly generated number that you use to sign transactions and so control your bitcoin. Anyone who knows the private key can spend the bitcoin that belongs to it – it must never fall into anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× is enough to spend bitcoin. With multisig (multi-signature), m of n keys are needed. A common set-up is 2-of-3: three keys are kept in different places, and any two are enough for a payment. This became practical in 2012 with P2SH addresses (starting with ‘3’); today it also works with SegWit and Taproot.^[1],[2],[3]

What it’s good for

• No single point of failure: one lost or stolen key on its own does no damage.
• Shared responsibility: for example for couples, companies or inheritance planning.
• Protection against manufacturer flaws: with hardware wallets from different manufacturers, a vulnerability at one manufacturer doesn’t put everything at risk.^[4]

What to watch out for

Besides the seed phrases, you have to back up the ‘descriptor’: the xpubsGlossaryxpub (extended public key)An extended public key from which all the addresses of a wallet account can be calculated. Nobody can spend bitcoin with it – but anyone who knows it can see your entire account history.In the glossary →× of all keys and how many are needed. Without it, the wallet can’t find the shared addresses – even with two of the three seed phrases. Signing usually happens via a PSBTGlossaryPSBT (partially signed Bitcoin transaction)A standard format for Bitcoin transactions that are not yet fully signed. It lets a wallet app, a hardware wallet and co-signers pass a payment between them without sharing private keys.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →× that travels from device to device.

Multisig takes time and several devices, and more parts mean more opportunities for mistakes. The wallet software SparrowProvider · Software walletSparrow WalletBitcoin desktop wallet with no purchase price and full transparency: coin control, PSBT, multisig and support for most hardware wallets.Non-custodial software – no financial licence required · reviewed Sept 2026Price: no purchase price (donations welcome); network fee when sending (as of Sept 2026)On the learning path: Stage 5 · Step 2 – Setting up your first wallet →Our profile →Official website ↗× recommends it only above roughly $100,000, and a single-key hardware wallet below that.^[4] How to set it up: Multisig simply explained.