⚙️ How Multi-Sig Works: M-of-N Signatures
Understand threshold signatures and why they prevent single points of failure
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Introduction
⚙️ How Multisig Works
Multi-signature wallets use threshold cryptography to require multiple approvals. The implementation differs between Bitcoin and Ethereum, but the principle is the same: M-of-N signatures required.
🎮 Interactive: Threshold Calculator
Adjust the threshold scheme to see how many signature combinations are possible
2
3
Scheme
2-of-3
Valid Combinations
3
Meaning: Any 2 signers out of 3 total can approve transactions. There are 3 different ways to gather 2 signatures.
✅ Balanced
Good balance of security and usability
Redundancy
Can lose up to 1 keys and still access funds
🔧 Bitcoin vs Ethereum: Compare Implementations
₿
Bitcoin Multisig
Native protocol support since 2012
P2SH (Pay-to-Script-Hash)
Bitcoin's original multisig uses P2SH addresses (starting with "3"). The redeem script specifies the M-of-N requirement.
OP_2 [pubkey1] [pubkey2] [pubkey3] OP_3 OP_CHECKMULTISIG
Meaning: 2 out of 3 public keys must sign
Transaction Flow
- Alice creates transaction and signs with her key
- Transaction passed to Bob (offline or via coordinator)
- Bob adds his signature to same transaction
- With 2-of-3 signatures, transaction is valid and broadcast
✅ Advantages
- • Native to Bitcoin protocol (very secure)
- • No smart contracts needed
- • Battle-tested since 2012
- • Works with any Bitcoin wallet supporting P2SH
⚠️ Limitations
- • Coordination required (signers must pass transaction)
- • Higher transaction fees (larger transaction size)
- • Limited to 15 signers maximum (OP_CHECKMULTISIG limit)
🔐 Threshold Signature Schemes (TSS)
Modern improvement over traditional multisig: Threshold Signature Schemes generate a single signature that appears identical to a single-sig transaction.
Traditional Multisig
• On-chain: M separate signatures visible
• Transaction size: Larger (M signatures)
• Privacy: Everyone sees it's multisig
• Cost: Higher fees (more data)
TSS (Modern)
• On-chain: 1 signature (looks normal)
• Transaction size: Standard
• Privacy: Indistinguishable from single-sig
• Cost: Normal fees
💡 How TSS Works
Private key is split into "shares" using cryptography. M signers combine their shares off-chain to create a single valid signature. On-chain, it looks like a normal transaction - no one knows it's multisig!
⚡ Key Concepts Summary
🎯
M-of-N Threshold
Need M signatures from N total signers. Common: 2-of-3 (teams), 3-of-5 (companies), 5-of-9 (protocols)
🔗
Bitcoin: Native
P2SH addresses with OP_CHECKMULTISIG. Simple, secure, battle-tested since 2012
📜
Ethereum: Smart Contracts
Gnosis Safe and similar contracts. Flexible, great UX, requires gas for signatures
🚀
TSS: Next Generation
Threshold signatures look like single-sig on-chain. Better privacy, lower fees, same security