A bitcoin address is traditionally associated with only one private key. Bitcoins are stored on the public ledger (blockchain). Losing your private key means losing the authority to move your bitcoins on the blockchain.
What is a multi-signature address?
A multi-signature address is an address that is associated with more than one private key. A simple example is the m-of-n address – it is associated with n private keys, and sending bitcoins from this address requires signatures from at least m keys.
The number of private keys needed to spend the bitcoins is decided in advance by the person generating the address. Once the mutli signature address is created it cannot be changed. A few examples:
- 1-of-1: Traditional transactions with your private key.
- 2-of-3: Two people must approve, and one extra backup key in cases of accidents.
- 4-of-4: Lock up your bitcoins with four private keys keys.
- 1-of-15: Anyone in the group of 15 can spend bitcoins.
- 15-of-15: Bitcoins are secured with 15 signatures!
Traditional bitcoin addresses start with a one (1), but multisig addresses start with a three (3). A traditional bitcoin address could be 1JxgRXEHBi86zYzHN2U4KMyRCg4LvwNUrp while a multisig address could be 3Hhb7rLR6MiVn6uGcboUuQ7q5wmh9odSww.
Support for multisig addresses
Wallets currently supporting multisignature addresses:
- Bitcoin core
- Armory
- Electrum
- coinb.in