When creating a multisig wallet, users define a set of keys that can sign transactions. For example, a 2-of-3 multisig wallet requires two out of three possible signatures to authorize a transaction. A transaction is created but remains unexecuted until the required number of signatures is provided. Participants provide their signatures. Only when the necessary threshold of signatures is reached is the transaction validated and broadcast to the network. Who Uses Multisig Wallets and Why Image: Unsplash Businesses and Organizations Security: Multisig wallets reduce the risk of theft by ensuring that no single individual can access the funds alone. Accountability: They provide an audit trail since multiple parties must agree to transactions. Access Control: Organizations can manage access to funds and ensure that transactions have consensus from multiple stakeholders. Cryptocurrency Exchanges Customer Funds Protection: Exchanges use multisig wallets to safeguard customer funds, requiring multiple employees to sign off on large withdrawals. Risk Mitigation: This reduces the risk of insider threats and external hacks. Joint Accounts Shared Ownership: Family members, business partners, or groups of friends can manage shared funds, with all parties needing to agree before spending. Trust Management: It builds trust among parties as no single member can misuse the funds. Escrow Services Secure Transactions: In escrow, a third party holds funds until the fulfillment of certain conditions. Multisig ensures funds are only released when all parties agree. Dispute Resolution: The involvement of a third party (e.g., an arbitrator) in the multisig setup can facilitate dispute resolution. Decentralized Autonomous…How multisig wallets work