09 Apr 2014 – Betabeat – The “Inside Bitcoins” conference is happening in NYC this week, and a collection of investors, businessmen, programmers and hobbyists have gathered to buzz about bitcoin’s future. But the Mt. Gox fiasco and the Chinese government crackdown still weigh heavily on the community’s mind, leading many of the conversations back to one issue: security.
The word on everyone’s tongues this week when discussing bitcoin security was “multisig,” or multisignature transactions. New startups and programmers are making multisig available as a tool for businesses, hoping it might just be the kind of innovation that could bring bitcoin into mainstream adoption.
So let’s go over what multisig is, and why it matters to the future of bitcoin.
What is “multisig”?
The basic idea is simple: a multisig transaction requires multiple people to sign off with their private keys before the bitcoin payment is sent to a receiving address (hence “multiple signatures”). A “2-of-3 multisig,” for example, would mean that three separate keys were tied to the transaction, and two were needed to authorize it.
Multisig allows for multiple parties to be involved in the payment process. Once someone has authorized a payment, a mediator (or multiple mediators) who has one of the keys can look at a transaction, determine if it is valid, and then chose to sign off on it or not.
