A few days ago, I got an email from a reporter asking me this:
What is needed to help bring Bitcoin security and ease of use to mainstream Bitcoin users?
I was in a hurry, trying to get through my email, and wrote back this:
i think wider use of multisig would be a good thing
Mutisig is a technology that was added to the Bitcoin protocol in 2011 and 2012. This article on Multisig by Vitalik Buterin is a good description of the technology. This is from Vitalik’s article:
In a traditional Bitcoin account, you have Bitcoin addresses, where each address has one associated private key that grants the keyholder full control over the funds. With multisignature addresses, you can have a Bitcoin address with three associated private keys, such that you need any two of them to spend the funds.
In principle this is a lot like the check-writing policies that many of our portfolio companies have. For checks below some number, say $5000, one signature is fine. But for checks above that number, two signatures are required.
Multisigned transactions are more secure. I would like to see more Bitcoin based systems implement multisig, as I explained to the reporter.
Yesterday our portfolio company Coinbase announced that their Vault service supports multisig. I use a Coinbase Vault and like to think of it as my “savings account” and I use it in combination with my primary Coinbase wallet, which I like to think of as my “checking account.” In addition to a Multisig Vault being more secure, it also allows the user to store their own private keys, something that has not been possible with the Coinbase wallet service. You can increase the number of required signatures from two of three to three of five. The latter service is great for family vaults or group vaults.
The reaction to Multisig Vault has been very good, as evidenced by this Hacker News thread. I particularly liked this comment:
the mere fact that a major Bitcoin exchange is allowing users to hold their own private keys really puts a smile on my face today.
It is completely unheard of in the financial industry (and usually technically impossible before cryptocurrencies) to have a bank give away their “middle man” access of people’s money and empowering their customers with complete control over their finances.
This is what Bitcoin is all about. Giving us control back over our money and taking it away from the financial institutions. It is not a coincidence that Bitcoin was invented in the wake of the financial crisis in 2008. But you can’t take control back from the financial institutions without providing trust and security. And multisig is a big part of that.
