The HD (identity) wallet or multi-chain wallet we use every day can usually only be stored with one public key. This means that whoever knows the private key that matches the public key can control the assets held on the public key chain. So in order to solve the key problem, multi-signature technology came into being.
Today we will talk about the meaning, function and significance of the multi-signature mechanism.
Multi-sig wallet concept
Multi-Sig means multi-signature, and multi-signature is a specific type of digital signature, and this type of signature will allow more than two users to sign as a group. Therefore, multi-signatures are generated through the combination of multiple single signatures.
For example, imagine a safe with two locks and two keys, one key held by A and the other held by B. The only way to open this safe is that both A and B provide the key to unlock it at the same time. If you only have one of the keys, you cannot open the safe.
In layman's terms, it is to divide the asset control of the wallet address into the hands of more than two people, which can help users better protect their wallet assets.
Glossary
Wallet Private Key: Used to send funds and verify transactions. The private key of the decentralized wallet is held by the user himself, and the user is responsible for protecting the security of the private key.
Wallet Public Key: Public keys are often used to encrypt session keys, verify digital signatures, or encrypt data that can be decrypted with the corresponding private key.
Wallet Address: It is the hashed version of the public key. When a user wants to receive funds, he reveals his wallet address to the other party.
The difference between single-signature and multi-signature wallets
Single signature wallet is currently the most common form of wallet in the blockchain wallet. At present, the wallet addresses held by most people are single-signature wallet addresses, and the wallet assets are only controlled by private keys or mnemonic words, which means that anyone can control the funds as long as they hold the corresponding private key. And this also means that only one key is needed to sign transactions, and anyone who has the private key can transfer the tokens in the address without any authorization.
Compared with multi-signature wallets, single-signature wallets are more convenient to manage, but also have greater risks. It is precisely because of this that criminals often obtain the private key of the user's single-signature wallet through phishing websites or pretend to be customer service, and steal user assets.
Multi-signature wallets provide a solution for this risk prevention. By setting multiple people to jointly manage an address, only a set number of managers must sign and agree to use the assets in the address, which greatly reduces the risks caused by unilateral private keys. Risk of asset theft.
The biggest feature of the multi-signature wallet is that it needs to be authorized by multiple private key holders to conduct wallet transactions. Under normal circumstances, the multi-signature wallet needs to confirm the "mn mode" when it is created. Only m holders of the n private keys can jointly sign and authorize the transfer and transaction of the cryptocurrency corresponding to the wallet address. and so on.
"2-3 mode" is the most common mode of operation in multi-signature wallets, that is, each transaction requires 2 of all 3 private keys to be signed and authorized to complete, which can better balance security and convenience Relationship.
Advantages of multi-signature wallets
1. Improve wallet security
In a single-signature wallet, the private key that determines the ownership and management of the cryptocurrency is only in the hands of the individual. Once the private key is lost or the holder forgets the wallet private key or mnemonic, it means that the holder loses the right to Control of the wallet address, and the crypto assets associated with it, will be completely lost. The existence of multi-signature wallets minimizes the risk of asset loss when a single private key is lost.
Multi-signature wallets greatly help users reduce security incidents caused by loss or theft of private keys. Since the multi-signature wallet is controlled by two or more wallet addresses, even if the private key of one of the wallets is leaked, the wallet assets of the multi-signature address cannot be transferred, which greatly reduces the risk of asset theft.
Taking the "2-3" multi-signature wallet mode as an example, among all 3 private keys, as long as 2 private keys have completed the signature authorization operation, the relevant encrypted currency can be transferred. Even if one private key is lost, the transfer of assets can be completed through the remaining two private keys to avoid asset loss.
2. Multiple verifications to avoid wrong transactions
Multi-signature wallets are also used for multiple verifications to avoid wrong transactions. When the bank transfers money, if the bank staff or the user makes a mistake when entering the account number, the transaction will fail and the money will be refunded to the original account; the transaction on the blockchain is irreversible, once the encrypted assets are transferred to the If the receiving address is incorrect, the asset cannot be returned. Using a multi-signature wallet, when a private key owner initiates an erroneous transaction, other private key holders can prevent the erroneous transaction by refusing to sign when they find the error. The more people involved in verifying a signature, the less likely erroneous transactions will occur.
summary
Since multi-signature wallets require multiple signatures to complete fund transfers, multi-signature wallets provide higher security, but currently users do not have enough understanding of multi-signature wallets, and we will continue to popularize more blockchains for users Knowledge, help users understand, keep learning!