There’s always a lot of talk regarding how to keep your Bitcoins safe. In today’s post I want to introduce a new wallet that just became available which will drastically boost the security of your Bitcoins.
Multisig – The Nuclear Launch Protocol for Your Bitcoins
If you’ve been dealing with Bitcoin long enough you’ve probably heard the term “Multisig”. Not long ago Bitpay launched Copay – a Multisig Bitcoin wallet. But what does multisig actually mean?
Multisig addresses or multisig wallets are wallets that need the autherization of a certain amount of people in order to conduct a transaction. Just imagine this as your own personal dual confirmation nuclear launch procedure. Here’s an example:
Let’s say I want to set up a Bitcoin company with 3 other partners. You decide to open a Bitcoin account for this purpose and define that in order to withdraw funds from the wallet at least 3 out of 4 signatures are needed. This way no one can make any financial decision alone with the consent of at least 2 more people.
Sign up with Copay
Opening an account with copay is easy. For the purpose of this tutorial I’ve used the web version of Copay but there’s also an Android version an a browser extension. To begin with, just name your wallet, decide how many people will be connected to it and how many signatures it will require. It’s not recommended to use Copay without any participants.
Invite the wallet’s participants
Once the wallet is created you will be given a secret key which you will need to send to the other participant. They will, in turn join an existing wallet and paste this secret key as their entry password. After all participants have joined you can start working with wallet (I believe you might be able to do so even before all 4 have come aboard).
It’s recommended that all participants backup the wallet and keep the backup in at least 2 different places – for example your email and a flash drive.
Why is this so important for my Bitcoins’ security ?
You can use a multisig wallet in order to prevent Bitcoin theft. In case someone hacks your Bitcoin wallet’s private key they still won’t be able to steal your Bitcoins since they won’t have enough signature to authorise any transactions. That’s why keeping you coins in a multisig wallet is a great security measure. For a detailed tutorial on how to use Copay watch the video at the top of this video.
Hi OFIR, I’ve been enjoying the email mini bitcoin course its quite helpful, thanks.
I wonder if you can help I seem to have lost some BTC. I have 3 Electrum wallets (Number2) (did have) the BTC which was sent from another Electrum wallet (Number 1) on the same computer.
Number 2 had the bitcoin which was transferred from Number 1 after the split on 2/8. Number 1 then had a zero balance.
Today I created a Coinomi BTC and BCC wallet on a separate android device using the wallet-words from number 1 wallet with the belief it would credit the BCC for BTC in the Number 1 wallet on 1/8 and of course sync and show zero balance in the Android BCT wallet.
However the Coinomi wallet after some time shows a zero balance. Also Wallet 1 seems to have overwritten Wallet 2 as they both show exact same history and zero balance.
I created a third Electrum (3) wallet using restore and entered the wallet words for Wallet 2 that had the BTC but that wallet (3) still shows a zero balance and no transaction history at all.
The private keys for wallet 1 and wallet 2 are identical. Can you tell from my info if this mean my BTC has been wiped out? How could Coinomi get into my wallet on a different device? Something is not right about this, can you help?
Hey Martin, thanks for the feedback.
Your description is very confusing, I will need you to be a bit clearer in order to see if I can help you out.
How can #1 and #2 have the same private keys if they are two different wallets?
The multisig wallet can also be used to boost security with just one person.
You simply need 3 keys, and it takes 2 to activate.
1 key is essentially no way to guess, with 2, no one can inject a fake transaction across the blockchain trying to steal your current bitcoins by starting an alleged transaction with a guessed key.
Not sure if you can create 1 member with 3 keys – will need to check this out. Have you tried this ?
I suppose you could create another account for yourself (the Bitcoin alter ego) and require dual sigs from yourself but you would likely need to keep them on separate computers.
Yes I guess that is possible.
yo utilizo coinbase y me va muy bien.
Good bye, stolen Bitcoins! I sure hope so because I’ve had some stolen in the past and I don’t want it happening again. It wasn’t much (I’m glad I didn’t have more in there) but it’s a horrible experience to go
I wonder, after you have, let’s say 5 members would that secret expire? I ask because if someone breaks in to your wallet, he/she can share that secret with other accomplices and they could steal the Bitcoins, couldn’t they?
The secret is different for each member so if one gets hack the wallet is still safe
Thank you for replying so fast, Ofir! This makes it even harder for someone to steal Bitcoins which is great!