Table of Contents Expand Table of Contents What Are Multi-Signature Wallets? How Multi-Signature Wallets Work Multi-Signature Wallets vs. Traditional Wallets: A Comparison The Purpose and Benefits of Multi-Signature Wallets FAQs The Bottom Line What Are Multi-Signature Wallets? Benefits & Use Cases Explained By The Investopedia Team Full Bio Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Learn about our editorial policies Updated May 19, 2026 Reviewed by Katie Miller Reviewed by Katie Miller Full Bio Katie Miller is a consumer financial services expert. She worked for almost two decades as an executive, leading multi-billion dollar mortgage, credit card, and savings portfolios with operations worldwide and a unique focus on the consumer. Her mortgage expertise was honed post-2008 crisis as she implemented the significant changes resulting from Dodd-Frank required regulations. Learn about our Financial Review Board Fact checked by Vikki Velasquez Fact checked by Vikki Velasquez Full Bio Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area. Learn about our editorial policies Investopedia / Michela Buttignol Close Key Takeaways Multi-signature wallets require multiple keys to approve a transaction, providing enhanced security for digital assets. These wallets are ideal for group-owned assets because they necessitate multiple approvals to access funds, which can minimize the risk of theft. While more secure than traditional wallets, multi-sig wallets involve greater complexity. They can still be vulnerable to hacks if software and credentials are compromised. Users must carefully choose multi-sig wallet providers to ensure the highest security standards and to prevent potential breaches. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ASK What Are Multi-Signature Wallets? Multi-signature wallets are a type of cryptocurrency wallet that requires multiple keys to unlock funds or approve transactions. Such wallets enhance account security when multiple individuals own digital assets or they're held in custody by a company. However, they involve a complex set-up due to their security features. Most individual account holders probably don't need multi-signature wallets. How Multi-Signature Wallets Work To understand how a multi-sig wallet works, it's important to know how a single-signature transaction is signed. When a transaction is initiated on a blockchain, a signature is required to verify that the user owns enough cryptocurrency and has the private keys needed to create a transaction. In single-sig setups, only one user (the transaction initiator) signs a transaction. Signatures are hexadecimal numbers generated using a user's public key. Only the recipient of the transaction can decrypt it because their private key must be used. Multiple signatures can be required to validate a transaction for more security. A wallet generates a multi-sig address and requires that a certain number of addresses from a given group of addresses must sign the transaction using their public keys. For example, if there are three addresses in the multi-sig group, only two of the three addresses need to sign the transaction. The blockchain programming aggregates these signatures into one signature. Thus, a multi-sig wallet is a program that can initiate and receive transactions that require multiple signatures, which adds security and increases blockchain efficiency. Quick Insight Any number of signatures can be required, but most multi-signature wallets rely on schemes where only a majority of requested signers must sign the transaction. Multi-Signature Wallets vs. Traditional Wallets: A Comparison Many cryptocurrency wallets rely on a single public address and private key. The public address is used to receive cryptocurrency, non-fungible tokens (NFTs), or other assets from others. A private key is required to access the wallet’s contents and send an outgoing transaction. If you use a software or hardware cryptocurrency wallet yourself, it automatically stores and uses your addresses and private keys, so you only need to remember a PIN or password. Every wallet uses different software and encryption to keep your keys and crypto assets safe. But multi-signature wallets take this one step further by requiring multiple inputs to get to the private key. For example, two users may have to unlock their individual wallets to get to the shared private key for the wallet holding the shared assets. The most robust multi-signature cryptocurrency wallets require multiple physical hardware wallets to be unlocked. The user wallets each contain a portion of the underlying wallet’s private key or another access code that can be used in combination with others as a password or key for the primary wallet. The Purpose and Benefits of Multi-Signature Wallets Multi-signature wallets work like the scene in a movie where two people must turn keys together; it's about needing two authorized people to act together. When depositing funds with an exchange or crypto IRA, you’d prefer your assets to be secure. Multi-signature wallets ensure no single person can withdraw funds without proper authorization. When depositing funds with an exchange or crypto IRA, you’d want your assets to be secure. Multi-signature wallets ensure that no single person can withdraw funds without proper authorization. Most people don’t need multi-signature wallets unless they share assets with someone they don’t trust. A single-password wallet suffices for personal use. Which Wallets Support Multi-Sig? Some multi-signature wallets are Electrum, Arbitrum, and Guarda. There are many more available, so if you are looking for one, make sure you do your research because wallets can be programmed with malicious intent. Can Multi-Sig Wallets Be Hacked? Yes. All cryptocurrency wallets are programs that provide you with an interface to the blockchain you're using, and programs can be altered. Are Multi-Wallets More Secure? Transactions must be signed by multiple users, which makes them more secure. However, multi-sig wallets are still programs that require user names and passwords. Software and access credentials can be hacked and stolen, so while these wallets offer more security than other wallets, they can still be altered for malicious purposes. The Bottom Line The core purpose of multi-signature wallets is to enhance security for digital assets by requiring multiple approvals for transactions. These wallets can deter unauthorized access and theft. Setting up and using multi-signature wallets involves more technical knowledge compared to single-signature wallets but the additional security may be worth it to some accountholders, such as businesses or those with jointly-owned crypto assets. It's important to thoroughly research and choose reputable multi-sig wallet providers. Including trusted individuals as co-signers or users of the multi-sig wallet enhances the wallet's security. Take the Next Step to Invest Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ASK Read more Cryptocurrency Buying & Selling Crypto Wallets Partner Links Take the Next Step to Invest Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.