Is Bitcoin multisig to hard?
Hey, man, I hope you’re doing well. I wanted to get back to you about something we spoke about last time. You know what? I’ve got some time on my hands, so maybe I’ll just go on a bit of a rant here and you can read this later.
So I’ve been hearing a lot of fud lately about Multisig being too complicated for average Bitcoiners. Bitcoin is the hardest money there is and i hope we all agree you can only truly own Bitcoin if you hold your own keys. Let that sink in for a second.
Bitcoin is regarded as hard money precisely because it cannot be rolled back or manipulated by any central authority. That’s great, right? But it also means there are no bailouts for those who lose their keys. So if holding your own keys is the only way to truly own Bitcoin, the responsibility is all yours. But this is no reason to panic. There have been countless people developing methods and tools to secure your seeds to a level of which you can sleep well at night. So where do we begin? Let’s break it down. The majority of the sovereign Bitcoiners hold their SATs in single signature wallets, meaning one seed protecting all funds. To ramp up security or not, you can always use a pass phrase in combination with your one seed and store it separately. You can think of this as a kind of two factor authentication, but both these setups have a single point of failure, and this is exactly what multisig designed to fix.
Multi signature is, as you may have guessed, is set up in which you have multiple keys with a predefined threshold of how many of these keys are required to complete a transaction. For example, the most common set up is a two or three multisig.
Any two or three keys must sign to create a valid transaction, but you could also do, 2 of 2, 3 of 5 or even 11 of 15 set up. This means you can afford to lose access to a portion of your keys and still recover your funds. This is a huge step in terms of seed security. For a bit of history, Gavin Andresen was the one first introduced multi signature transactions back in 2011.
So this isn’t a new concept. In fact, it doesn’t get too much older than this in the Bitcoin space. But for quite a few years, creating and managing multi signature wallets was extremely complex, and it wasn’t until the development of hardware wallets and desktop coordinator software that things got more broadly approachable. But especially in the last two years, the progress around multsig management has been phenomenal. Next to all the technical improvements, there are now tonnes of tutorials, articles and other educational material to guide you through the process. So now you have a high level idea of what multisig is, how it has developed and how it can improve your security. Here is some actionable advice in form of a seven step plan.
- Step one. Do your own research and document as much information about your considerations, decisions and ongoing changes to set up as possible.
- Step two. Identify your threat model theft loss, destruction through environmental forces. Legal prosecution, etcetera.
- Step three. Determine the budget for your set up in relation to the amount of funds you want to secure.
- Step four. Choose the number of total keys, signing threshold and storage locations.
- Step five. Choose your method for backing up your keys.
- Step six. Acquire hardware wallets or assigning device and instal multisig coordinated software on your laptop or phone.
- Step seven. Create your keys and back up your keys as well as your wallet descriptor and set a time interval to check your backups.
Now you’re ready to go.
In case this may be too abstract I’ll give you an example for a cold storage multsig setup. But keep in mind that there are many alternatives available, and you should adapt this to your personal situation.
Let’s start with a threat model. In this scenario, we’re most concerned about theft, residential fire and shooting ourselves in the foot. For a budget, let’s say we’re securing 0.5 Bitcoin. The current prices 1% would give us a security budget of roughly $200, as a number of keys i will choose a two or three multisig setup to eliminate single point of failure but manageable number of keys to keep things relatively simple. As for locations, we have one key at home in a safe, one in a safety deposit box within our country and one with a close family member or trusted friend.
We’re going to use the password manager bit warden to secure our wallet descriptor. We’ll use three high quality stainless steel backups. The seed signer is a great choice as assigning device, as coordinator software will be Sparrow Wallet for desktop and or blue wallet for mobile. Total cost. 150 to $200 for the seed signer and the plates, plus the annual fees for the safety deposit box. Not too bad, right? I know this isn’t a walk in the park, but most of the heavy lifting is related to critical analysis of your situation and deciding on a set up in the first place. The technical modesty component is pretty straightforward.
So to wrap this up, i really don’t think multisig is too much of a hassle. I understand the complexity is the enemy of security, but in my opinion, we have reached a level of simplicity with multi signature management in which the benefits far outweigh the risks. Give it a shot and feel free to reach out to me if you have any questions along the way. Okay, keep it up, man. See you soon. Bye.
Thanks for reading. I hope that was helpful. And if you have any fud, you would like busting. You can always reach out to me by email or on Twitter. If you found it useful, make sure to share with friends and family and also make sure to subscribe and check out ungovernable misfits dot com