It’s a tale as old as cryptocurrency. A man invests a small sum into a cryptocurrency and forgets about it for years. He then accidentally throws away the hard drive that contains his crypto fortune.
Sounds far-fetched? Quite the contrary, in fact.
This was the sad story of James Howells, a man who invested about 8,000 bitcoins several years ago. These coins would have been worth about $226,089,600 million today.
Howells could be a multimillionaire had he not lost the hard drive containing his bitcoins. The incident occurred way back in 2009. Howells has been trying to retrieve the lost hard drive for the better part of a decade.
But it isn’t just human error that poses a threat to the safety of one’s crypto fortune.
Hackers love targeting crypto-wallets.
In the first half of 2022, Kaspersky detected about 200,000 phishing attacks from hackers trying to rob people of their cryptocurrency.
All this highlights one key fact.
Extreme Security Measures Are Mandatory When Dealing With Cryptocurrency
Multi-signature wallets, also known as “multisig” wallets, are one of the best security methods available today. These wallets do a fantastic job of protecting the crypto-wallets of individuals and organizations.
Multisig wallets are based on the idea that multiple private keys ensure an extremely low risk of cryptocurrency loss. This is because hacking or human error is unlikely to affect multiple separate devices.
What is a private key, you ask, though? Good question.
A private key is a sort of secret code that one can use to access and manage your crypto funds. It is in the form of a long alphanumeric string.
Virtually all conventional crypto wallets rely on a private key. This is the only way to access funds stored in your crypto wallet. Thus, keeping your private key secure is one of the most important parts of maintaining a crypto wallet. Without your key, your cryptocurrency is essentially impossible to recover.
How Are Multisig Wallets Better?
Unlike conventional crypto wallets, multisig options require multiple private keys if you want access to your funds or wish to authorize transactions.
While multisig wallets can be used by individuals who want that extra layer of security, they are most useful when businesses and organizations want to manage a large amount of cryptocurrency.
In these situations, multisig wallets ensure no single person has complete control over the funds. Instead, access is only granted when multiple signatures (or private keys) are used. As you can imagine, this brings a ton of more security.
How Does One Get Started With a Multisig Wallet?
Well, first, you need to determine the number of signatures you want. Multisig wallets typically come in different configurations, such as in 2-of-3 or 2-of-2.
A 2-of-2 multisig wallet means that in order to access your funds or authorize transactions, you would need both of the private keys. One can use this type of configuration where you store one key on your personal computer while storing the other key on your phone.
It does pose one danger, though. If you lose one key, you basically lose access to your funds.
2-of-3 multisig wallets operate in the same way, but as the name suggests, you only require access to two out of the three private keys to access your funds. Once again, individuals can use these multisig options. But they are invaluable when a group is involved, and you don’t want to risk letting only one person have all the access.
If a bitcoin or ethereum wallet sounds attractive to you, then you should definitely consider looking into a service like Casa. They feature a number of flexible options when it comes to cryptocurrency security and even offer a free wallet for users with basic needs.
Casa places a huge emphasis on security, and their services have been vetted in the stringent and no-nonsense crypto world. As a result, they even made it to bitcoinmagazine’s Best Multisig Wallet list.
Why You Should Use a Multisig Wallet for Crypto
Starting a multisig account is as simple as choosing a wallet provider, specifying the number of keys you wish to have, and funding your wallet. However, once this process is done, it is vital that you continue to maintain the security of your keys and frequently review safety protocols.
Multisig wallets are the obvious option for individuals and businesses wanting to take the security of their cryptocurrency seriously. Due to the unregulated nature of cryptocurrency, hackers are aware that once they obtain your keys and gain access to your wallet, there is virtually no way of retrieving or tracking down your funds.
Remember to be cautious and always do your own research before investing in security measures.
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