Home
Glossary

Glossary

This glossary contains terms and definitions used throughout the Coffer documentation.

Multi-Signature

Multi-signature (multisig) is controlled by Bitcoin Multi-Signature Scripts. It requires multiple keys to authorize a Bitcoin transaction.

Benefits

  1. Shared Responsibility: Divides possession of Bitcoin among multiple parties.
  2. Enhanced Security: Reduces the risk associated with single points of failure, protecting your assets even if a key is lost or compromised.
  3. Backup Capability: Ensures wallet recovery even with partial key loss.
  4. Customizable: Tailor each smart account to fit your specific needs, allowing you to set up configurations that work best for your particular use case.

Possible configurations

1/1 Multisig Account: An account with a single owner who has full control and ownership. Ideal for setting up a smart account with a single EOA that can take advantage of all smart account functionalities. Warning: If the owner loses access to their private key, there is no way to recover the account. A recovery plan or an emergency mechanism to handle key loss should be set.

1/N Multisig Account: An account shared between two or more individuals, any owner has full control of the account. It is also known as Joint Account. Joint accounts are most likely to be used by relatives, couples, or business partners who have a level of familiarity and trust with each other.

N/N Multisig Account: An account with multiple owners, all of whom must approve a transaction before it is executed. This setup is perfect for scenarios where equal ownership and responsibility among all participants are required. Warning: If any owner loses their private key, the multisig account may become locked and unable to process transactions. A recovery plan or an emergency mechanism to handle key loss should be set.

M/N Multisig Account: An account with multiple owners, but only a subset of them is required to approve a transaction. This configuration is useful when you want to distribute responsibility while maintaining flexibility in decision-making.

2/3 Multisig Account: This is the standard and most widely used M/N multisig account type. It's a special case of M/N multisig account.

Possible scenarios

Q: Are you worried about forgetting a single key?

You can create a 2/3 multisig, losing any single key will not result in asset loss.

Q: Are you afraid of having your mnemonic words stolen?

You can create a 2/3 multisig, no one can steal your assets by stealing any group of mnemonic word.

Q: Do you want to share assets with your family or business partners?

You can create a 1/n multisig, anyone in the group can spend the asset.

More usage scenarios are waiting for you to unlock together.

Standards and Evolution

  1. Introduced by BIP11 with m-of-n transactions.
  2. Transitioned from P2SH to Segwit P2WSH for up to 20 co-signers.

Creating Multi-Signature Addresses

  1. Gather or generate Bitcoin addresses.
  2. Retrieve public keys using the validateaddress command.
  3. Use addmultisigaddress to create a multi-signature address.

For detailed guides, refer to resources:

What is CoBTC?Community