Multisignature is a scheme for implementing an electronic signature that requires T keys from a group of N members (T < N) for its validity. At its core, it is a variant of the threshold signature. Still, it is implemented not as a single object but as a check of the specified conditions, which is carried out by the basic system of cryptocurrency scripts.
Multisignature in Bitcoin
A feature of Bitcoin and many other cryptocurrencies is the irreversibility of transactions. There is no mechanism for canceling a transaction entered into the blockchain. There is also no possibility of any other action that ignores the will of the current owner. But Bitcoin has a built-in scripting language that allows you to specify various additional conditions for conducting transactions. One of the possible conditions implemented through scripts is creating a Bitcoin address, which requires a specified number of signatures from a given list to manage (the T-of-N principle).
The first character of multisigned Bitcoin addresses is a triple (standard Bitcoin addresses start with one).
In August 2013, BitGo was the first to implement an interface in which the company’s clients could create and use multi-signature addresses without directly accessing scripts.
A multisignature in Bitcoin is a collection of signatures of different users, not a single object. Multisignature is implemented in other cryptocurrencies in different ways. The Ethereum smart contract language has much more features than the Bitcoin scripting language.
Addresses that require any two keys out of the specified three are widely used for operations with them. Most often, this is what is meant by the term “Multi-signature.” They allow you to implement reversible transactions.
Multisignature in WorkQuest
Sometimes there is a need to withdraw the funds from a shared wallet. Specifically for such cases, we implemented the technology of Multisignature. It allows ensuring that the funds will be withdrawn only if at least 80% of the participants agree. This technology is very similar to the one Ethereum Blockchain uses in its multi-sig smart contracts.
Multisignature is used in three types of transactions — CreateMultisig, CreateTransaction, and SignTransaction.
CreateMultisig creates a wallet with a multi-signature. CreateTransaction creates a transaction to output the specified number of specified coins to the specified address. The creator of the transaction signs it immediately, and the transaction gets its unique identifier.
SignTransaction is a type of blockchain wherein the parameters there is a unique identifier of the transaction.
The multi-signature principle can be used to increase the security level for cryptocurrency payments. The 2-of-3 formula allows you to create a corporate address based on the signatures of the owner, director, and accountant.
With a multi-signature made up of family members with a small number of mandatory signatures, the loss of the secret key does not become a catastrophic problem. Even if the key falls into the wrong hands, the attacker is unlikely to convince the victim’s relatives to sign the transaction.
Multi-signature, which requires more than half of the board of trustees of a particular fund, will automatically act as a vote when considering decisions on the use of funds. Only those projects that receive the majority of votes in signatures under the transaction will be paid.
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