B++ Logo
Feedback

Multisig

Multi-signature (multisig) wallets require multiple signatures to spend funds. This provides enhanced security, shared custody, and flexible access control. A multisig wallet requires M-of-N signatures:

  • M: Minimum number of signatures required
  • N: Total number of possible signers
  • Example: 2-of-3 means 2 signatures from 3 possible keys

Common configurations: 2-of-2 (two parties must both sign, e.g. partnership), 2-of-3 (two of three parties must sign, e.g. backup key), 3-of-5 (three of five, e.g. corporate), or flexible M-of-N.

Multisig Script Patterns

Legacy Multisig (P2SH)

Script Pattern:

OP_M <pubkey1> <pubkey2> ... <pubkeyN> OP_N OP_CHECKMULTISIG

Example (2-of-3):

OP_2 <pubkey1> <pubkey2> <pubkey3> OP_3 OP_CHECKMULTISIG

Spending Script:

OP_0 <sig1> <sig2>

Note: OP_0 is a bug workaround (dummy value before signatures)

SegWit Multisig (P2WSH)

Redeem Script:

OP_2 <pubkey1> <pubkey2> <pubkey3> OP_3 OP_CHECKMULTISIG

Script Hash:

OP_0 <scripthash>

Spending:

  • Witness: <sig1> <sig2> <redeem_script>
  • More efficient than legacy

Taproot Multisig (P2TR)

Modern Approach:

  • Uses Taproot script trees
  • More efficient
  • Better privacy
  • More complex implementation

Creating Multisig Wallets

Using Bitcoin Core

# Step 1: Generate keys (each party does this)
bitcoin-cli getnewaddress

# Step 2: Create 2-of-3 multisig address
bitcoin-cli createmultisig 2 \
  '["<pubkey1>", "<pubkey2>", "<pubkey3>"]'

# Step 3: Fund the multisig address
bitcoin-cli sendtoaddress <multisig_address> <amount>

The createmultisig command returns:

  • Address: Multisig address to receive funds
  • Redeem Script: Script needed to spend
  • Descriptor: Modern descriptor format

Programmatic Multisig Creation

Spending from Multisig

Step 1: Create Transaction

# Create raw transaction
bitcoin-cli createrawtransaction \
  '[{"txid":"...", "vout":0}]' \
  '{"<destination>": <amount>}'

Step 2: Sign with First Key

# Sign with key 1
bitcoin-cli signrawtransactionwithkey <hex> \
  '["<privkey1>"]' \
  '[{"txid":"...", "vout":0, "scriptPubKey":"...", "redeemScript":"..."}]'

Step 3: Sign with Second Key

# Sign with key 2 (using partially signed transaction)
bitcoin-cli signrawtransactionwithkey <partially_signed_hex> \
  '["<privkey2>"]' \
  '[{"txid":"...", "vout":0, "scriptPubKey":"...", "redeemScript":"..."}]'

Step 4: Broadcast

# Broadcast fully signed transaction
bitcoin-cli sendrawtransaction <fully_signed_hex>

Key Management

Key Storage

Best Practices:

  • Distributed: Each party stores their own key
  • Secure: Use hardware wallets or secure storage
  • Backup: Backup keys securely
  • Recovery: Plan for key loss

Key Security

Options:

  1. Hardware Wallets: Most secure
  2. Paper Wallets: Offline storage
  3. Encrypted Storage: Encrypted files
  4. Custodial: Third-party custody (less secure)

Use Cases

1. Shared Custody

Example: Business partnership

  • 2-of-2: Both partners must agree
  • Use case: Business funds
  • Benefit: No single point of failure

2. Backup Security

Example: Personal wallet with backup

  • 2-of-3: You + Backup key + Hardware key
  • Use case: Personal funds with backup
  • Benefit: Can recover if one key lost

3. Corporate Wallets

Example: Company treasury

  • 3-of-5: Three executives must sign
  • Use case: Corporate funds
  • Benefit: Distributed control

4. Family Funds

Example: Family savings

  • 2-of-4: Two family members must agree
  • Use case: Shared family funds
  • Benefit: Prevents single person control

Security Considerations

Advantages

  1. No Single Point of Failure: Multiple keys required
  2. Distributed Trust: No single party controls funds
  3. Backup Options: Can lose some keys
  4. Flexible Access: Different M-of-N configurations

Risks

  1. Key Loss: If too many keys lost, funds locked
  2. Coordination: Requires multiple parties
  3. Complexity: More complex than single-sig
  4. Key Compromise: If M keys compromised, funds at risk

Best Practices

  1. Secure Key Storage: Use hardware wallets
  2. Backup Strategy: Plan for key loss
  3. Key Distribution: Don't store all keys together
  4. Regular Testing: Test spending process
  5. Documentation: Document key locations and recovery

Implementation Details

Script Execution

Multisig Script:

OP_2 <pubkey1> <pubkey2> <pubkey3> OP_3 OP_CHECKMULTISIG

Execution:

  1. Push M (2)
  2. Push pubkeys (3)
  3. Push N (3)
  4. OP_CHECKMULTISIG:
    • Pops N, then N pubkeys
    • Pops M, then M signatures
    • Verifies M signatures match M of N pubkeys
    • Returns 1 if valid, 0 if invalid

Transaction Size

Multisig Transactions:

  • Larger: More signatures = larger transaction
  • 2-of-3 P2SH: ~250-300 bytes
  • 2-of-3 P2WSH: ~200-250 bytes (witness)
  • Fees: Higher fees due to size

Common Issues

Insufficient Signatures

Problem: Not enough signatures to spend

Solution:

  • Collect required number of signatures
  • Ensure all signers are available
  • Use backup keys if needed

Key Loss

Problem: Too many keys lost

Solution:

  • Use remaining keys (if M still available)
  • If M keys lost, funds are locked
  • Plan for key recovery

Coordination Challenges

Problem: Difficult to coordinate multiple signers

Solution:

  • Use signing services
  • Batch transactions
  • Plan signing sessions
  • Use hardware wallets for convenience

Summary

Multisig wallets provide:

  • Enhanced Security: Multiple keys required
  • Shared Custody: Distributed control
  • Backup Options: Can lose some keys
  • Flexible Access: Various M-of-N configurations
  • Corporate Use: Suitable for organizations

Understanding multisig is essential for building secure Bitcoin wallets and managing funds with multiple parties.