Multi-signatory Accounts now Secure up to 6M Bitcoins

About 33% of total Bitcoins are now secured with a strategy that was developed after Mt Gox Bitcoins were stolen.

This accounts for nearly 6 million BTC in shared custody.

Prevents Losses

Bitcoin theft is prevented by using public and private keys. To use the network, the person signs every transaction with a private key. This is good but not the best in some cases.

For instance, think about a situation where someone establishes a crypto exchange, registers the assets with a private key and succeeds in attracting several users/investors. Everyone whose assets are in the exchange will lose their money if anything unfortunate happens to the founder. It could be death, robbery or the founder may even decide to close the exchange if he is wicked.

To prevent this, there was a soft fork in 2012 that made it possible for wallets to use several signatures. That made it possible for Bitcoins in a wallet to be secured by more than one signatory and before money can be withdrawn, some of the signatories must be contacted. Therefore a wallet can now be controlled by more than one person and no dime can be spent without their consent.

Mt. Gox’s hack made multi signatures rampant

When a person wants to start an exchange service, he can bring up all the signatures that will be needed for the shared custody. These can be signatures of the top officials of the company. The founder also has the right to use a third party he can trust. It is not mandatory to use all the signatures for a transaction. For instance, if there are five signatures to secure the wallet, the founder may specify three for some kinds of transactions.

The use of multiple signatures to secure a wallet started in 2012 but it became more rampant from 2015 after Mt Gox was hacked and several Bitcoins were stolen.

This feature now makes it easy to estimate the number of wallets that are owned by businesses since individual holders do not usually use multi signatures for their accounts.

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