What Are Multisig Wallets? | NZ's Crypto Guide (2025)

Multisig wallets, often referred to as “multi-sig,” represent a category of cryptocurrency wallets

These wallets prove particularly valuable in scenarios where digital assets are collectively owned by multiple individuals or are under the custody of a company or even a DAO.

While the setup and usage of these cryptocurrency wallets

For users in New Zealand, several robust multisig solutions are available, catering to different blockchain ecosystems and security needs.

Bitcoin-Focused Multisig Wallets

Electrum Wallet

Electrum is a long-standing and highly respected Bitcoin-only desktop wallet known for its advanced features and strong security. It offers native support for multisig setups, allowing users to create custom M-of-N configurations. For example, you could set up a 2-of-3 multisig where one key is on your hardware wallet, another on a secure desktop, and the third is a backup stored offline.

Key Features for Multisig:

• Customizable M-of-N: Users can define the exact number of signatures required and the total number of keys.
• Hardware Wallet Integration: Seamlessly integrates with popular hardware wallets like Ledger and Trezor for enhanced key security.
• Offline Signing: Supports cold storage setups where transactions can be signed offline, further isolating private keys from internet-connected devices.

My Insight: Electrum's multisig functionality is a true testament to decentralized security. It empowers users with full control over their keys and approval processes. While it might have a steeper learning curve for beginners, the security benefits for significant Bitcoin holdings are undeniable. It's a tool for those who truly want to be their own bank.

Blockstream Green (with 2FA Multisig)

Blockstream Green is a popular mobile wallet that offers a unique approach to enhanced security, often referred to as "2FA multisig." In this setup, Blockstream holds one key, and the user holds the other. To authorize a transaction, both keys are required. This effectively acts as a 2FA mechanism, as the user must authenticate with Blockstream (via email, SMS, or an authenticator app) to get their signature on the transaction.

Key Features for Multisig:

• Simplified 2-of-2 Multisig: Easy to set up and use, providing a significant security boost over single-signature wallets.
• Time-Locked Recovery: If Blockstream were to disappear, users can still recover their funds after a predefined time lock expires, using a pre-signed transaction.
• Hardware Wallet Support: Can be paired with hardware wallets like Blockstream Jade for added security.

My Insight: Blockstream Green's 2FA multisig is an excellent option for those who want enhanced security without the complexity of managing multiple keys themselves. However, it's important to understand that this is not a true, decentralized multisig setup. You are trusting Blockstream to co-sign your transactions. While they have robust security measures in place, it introduces a third-party dependency.

You could, however, give access to the 2FA to another person, creating a pseudo-multisig setup where two individuals are required to approve a transaction.

Ethereum-Based Multisig

Gnosis Safe (now Safe)

For those operating within the Ethereum ecosystem, Safe (formerly Gnosis Safe) is the gold standard for multisig smart contract wallets. It allows users to create a secure, on-chain wallet that requires multiple signatures to authorize transactions involving ETH and ERC-20 tokens. Safe is widely used by DAOs, businesses, and individuals to manage treasury funds and high-value assets.

Key Features for Multisig:

• Smart Contract-Based: All rules and permissions are enforced by a battle-tested smart contract on the Ethereum blockchain.
• Customizable Policies: Set up flexible M-of-N signature requirements and define spending limits.
• dApp Integration: Seamlessly interact with a wide range of DeFi protocols and dApps directly from the Safe interface.
• Cross-Chain Support: Available on multiple EVM-compatible chains, including Polygon, Arbitrum, and more.

My Insight: Safe has become the go-to solution for anyone serious about securing assets on Ethereum. Its on-chain nature provides unparalleled transparency and security. From managing a project's treasury to securing personal DeFi investments, Safe offers a level of control and peace of mind that is unmatched in the Ethereum world. The ability to customize policies and interact with dApps makes it an incredibly powerful tool for both individuals and organizations.

Multisig vs. Two-Factor Authentication (2FA)

It's crucial to differentiate true multisig from 2FA, as they serve different security purposes:

• Two-Factor Authentication (2FA): 2FA adds a second layer of verification to an account, typically requiring something you know (password) and something you have (a code from an authenticator app or SMS). While it makes unauthorized access harder, it still relies on a single private key for the underlying asset. If the primary key is compromised, and the 2FA mechanism is bypassed or controlled by the attacker, funds can still be lost. Some services, like Blockstream Green's 2FA, use a form of multisig where a third party (Blockstream) holds one key, effectively acting as a 2FA provider. While this adds security, it introduces a reliance on that third party.
• True Multisig: In a true multisig setup, all required keys are typically controlled by the user(s) or trusted parties. No single entity can move funds without the explicit consent of others. This eliminates single points of failure and provides a higher degree of decentralized control over assets. For instance, a 2-of-3 multisig where you hold two keys and a trusted friend holds the third means no one person can spend the funds alone, and even if one key is lost, the funds are still recoverable with the other two.

Multisig wallets offer several compelling advantages:

• Enhanced Security: By distributing control, multisig significantly reduces the risk of theft from a single point of failure, such as a compromised private key or a hacked device.
• Shared Control & Governance: Ideal for businesses, DAOs, or families where multiple individuals need to approve transactions, ensuring transparency and accountability.•Inheritance Planning: Facilitates secure transfer of assets to beneficiaries in the event of unforeseen circumstances.
• Protection Against Loss: If one key is lost or destroyed, funds can still be accessed with the remaining required keys.

Beyond heightened security measures and the involvement of multiple parties, utilizing multisig wallets offer various additional advantages, Especially for institutions or DAOs.

No 'Key Person' Risk

To start, the architectural layout of multisig wallets mitigates the conventional “key person” risk. This risk arises when a company heavily depends on a sole individual for its success. This risk is prevalent especially when one person holds control over the wallets.

Buildable

As a smart wallet, multisig wallets offer flexibility for easy adjustment or enhancement to suit the requirements of an institution or DAO in New Zealand. By expanding on the wallet’s foundation, developers have the capability to devise protocols and models enabling more intricate functions, such as DAO voting or asset management services.

Greater Transparency

Multisig wallets offer heightened transparency, especially when compared to other wallet types. Transaction policies, signers, and actual transactions are openly accessible. This transparency provides a clear understanding of transaction rules and holds participants accountable for directing funds. A infamous Example of this is QuadrigaCX

Moreover, the open-source characteristic of multisig wallets allows anyone in NZ to inspect the governing code. With transparent and open development, individuals can conduct audits to ensure the safety and security of funds within these wallets.

Multisig wallets represent a significant step up in security for cryptocurrency users in New Zealand. Whether you're a Bitcoin holder looking for robust self-custody with Electrum, an Ethereum user managing assets with Safe, or someone seeking a simplified 2FA-like experience with Blockstream Green, there's a multisig solution to fit your needs.

While they may require a bit more setup and management than single-signature wallets, the enhanced security and peace of mind they provide are well worth the effort, especially for those holding significant amounts of cryptocurrency. As the crypto landscape continues to evolve, multisig technology will undoubtedly play an increasingly important role in securing digital assets.