Multisig
Multisig is a wallet that needs signatures from several keys to move funds, for example 2 of 3. Losing one key, or having it stolen, does not give anyone access to the money.
How it works
A normal wallet is controlled by one key: whoever holds it owns the coins. A multisig sets an M-of-N rule: there are N keys, and every transaction needs M signatures. The most common setups are 2-of-3 and 3-of-5.
This guards against two problems at once. If one key is stolen, the thief can do nothing with it. If you lose one key, the rest are enough to move the funds to a new wallet. Keys are kept in different places, often on different hardware wallets.
In Bitcoin multisig is built into the scripting system; in Ethereum it is done with a smart contract. Companies, funds, DAOs and project treasuries use it, as do individuals holding large amounts. The downsides are a harder setup and higher transaction fees, and a mistake in backing up the setup can lock the funds.
A 2-of-3 setup: key A on a hardware wallet at home, key B on another device in a safe deposit box, key C with a trusted relative. A thief steals the device with key A, but one key is not enough. You lose key C, so you sign with A and B and move the funds to a fresh setup.
A common mistake is backing up the seed phrases but not the wallet configuration itself (in Bitcoin, the descriptor or all cosigners' public keys). Without it, recovery is very hard. Back up the configuration alongside the keys and test a recovery with a small amount.
Questions and answers
What is multisig in simple terms?
It is a wallet that needs several signatures to send money, like a safe deposit box with two keys. One key alone cannot do anything.
What does 2-of-3 multisig mean?
There are 3 keys and any 2 of them can approve a transaction. You can lose one key, or have it stolen, without losing the money.
How is multisig different from an MPC wallet?
Multisig uses several full keys, and the rule is visible on the blockchain. MPC splits one key into shares that together produce a normal single signature.
Related terms
Read next
Six settings that close the most common ways exchange accounts get taken over. It takes about half an hour.
Read →How to store your seed phrase and keys: a simple schemeYour seed phrase gives full access to a wallet. Where to keep it and what never to do.
Read →Passphrase (25th word)A passphrase is an optional extra word or phrase added to a seed phrase. With it, the same 24 words open a completely…
Updated: 2026-10-19