Holding cryptocurrency online need not be risky when held in a multi-sig wallet with an insurance backed guarantee protecting funds.
A digital wallet allows you to store various cryptocurrencies such as Bitcoin and Ethereum, and enables users to send and receive these digital assets. When a person sends you Bitcoins or any other type of digital asset, they are essentially signing off ownership of the coins to your wallet’s address. In order to gain access and send crypto through digital wallets, you must use a special “key” to open the wallet.
Now that’s where Multi-Sig Wallets come in. They are high security versions of digital wallets that need two “keys”, instead of one, at any time to open the wallet and send crypto. This provides an extra level of security, helping to prevent you from ever losing access to your funds, while reducing the likelihood of having your funds stolen.
“To simplify things, some people like to think about a multi-sig wallet like a safe deposit box in a bank – they usually come with two locks and two keys. When going to the bank, both you and the bank manager need to be present at the same time to open the box and one can not open the box without the other.”
BitGo multi-sig wallets consist of three private keys: one held by BitGo, one held by the user, and one held on behalf of Coincover. Two signatures are required on every transaction on a BitGo wallet, and in the usual case, this would be done by BitGo and by the user.
Keys are encrypted and stored safely offline in a highly secure vault in several UK locations.
Funds can only be accessed with your authorization so your funds stay secure.
Funds are retrieved and sent back to you as soon as possible upon a validated claim.
This comes down to how much you care about the contents of your wallet. Over time cryptocurrency is becoming increasingly valuable and as such holding cryptocurrency comes with more risk; such as security risks through hacking and fraud as well as the risk of losing access to a wallet through misplaced keys.
The more signatures needed to confirm the transaction, the less likely it is that someone or something could hack into an account and move funds because the likelihood of hacking two or more keys is highly diminished.
In a single signature wallet with just one key, the user has all the responsibility for taking care of their private key. Should they it they will forever lose access to the wallet and the funds within it.
Can be used by companies in a way that ensures a majority of the stakeholders with access to the wallet unilaterally agree on transactions to be made.
Can be used in the facilitation of escrow services. While the cryptocurrency market is still young there remains a fairly high level of distrust, especially when it comes to larger transactions or dealing with unknown entities.
Wherein a husband and wife have a joint account, both signatures are required to spend the Bitcoin or another cryptocurrency, preventing one spouse from spending the currency without the approval of the other.
Here a wallet can be set up so a child has access to funds with the parents' permission, but the parents are not able to spend the currency without the child's permission either.
All the while the wallet holder is alive, they have full access and control of their funds, but should they die or be otherwise incapacitated, the two alternative key holders can open the wallet and redistribute the contents per the terms and conditions of the deceased's final wishes.
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Digital Asset Services Ltd (trading as Coincover) is registered in England and Wales under company number 11356137 and its registered office is at Capital Building, Tyndall Street, Cardiff, CF10 4AZ. Coincover is registered with the Financial Conduct Authority.