Multisig (multisignature) is a method used to enhance the security of cryptocurrency transactions, where multiple signatures from different participants are required to execute a single transaction. Instead of using one key to access funds, multiple keys are used, which helps secure the funds against theft or misuse. Common schemes include “2 of 3” or “3 of 5,” where a specified minimum number of signatures is required to approve a transaction.

Key advantages of multisig:

Asset management: Useful for companies or groups, where transaction decisions are made collectively.
Security: Reduces the risk of unilateral control, minimizing the possibility of theft, hacks, or fraudulent actions.
Transparency: All participants can see that multiple signatures are required, which increases trust among partners.

Applications of multisig:

Cryptocurrency storage: Used for holding large amounts or reserve funds.
ICO and crowdfunding: Often used to manage funds raised during ICOs to reduce risks.
DAO: Organizations where decisions are made in a decentralized manner by a group of participants.

How it works:

At the level of smart contracts or wallets, an address is created where multiple signatures are required to execute a transaction. For example, to send funds from a multisig wallet, approval from 2 out of 3 participants may be needed.