Multi-Signature Wallet
A crypto wallet that requires approval from multiple private keys before a transaction can be executed. For example, a 2-of-3 multi-sig wallet requires 2 out of 3 designated keyholders to approve any outgoing transaction. Often used by teams and DAOs for added security.
Why It Matters
A multi-signature wallet requires multiple private keys to authorize a transaction, enhancing security. This feature is especially important for businesses or individuals who want added protection against theft or mistakes.
Example
For instance, a company might use a multi-signature wallet that requires three out of five key holders to approve any outgoing transaction. This helps prevent unauthorized access and ensures collective decision-making.
Beginner Context
For new users, understanding multi-signature wallets highlights the importance of security in cryptocurrency. They represent a practical tool for managing funds collaboratively while reducing risks.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
Rug Pull
A type of crypto scam where developers abandon a project after raising funds, withdrawing all liquidity and leaving investors with worthless tokens.
Resistance
A price level at which a cryptocurrency has historically had difficulty breaking above. When an asset approaches a resistance level, selling pressure tends to increase. If the price breaks through resistance, it can signal a strong uptrend.
Custodial Wallet
A wallet where a third party (usually an exchange) holds the private keys on your behalf. Custodial wallets are convenient and allow password recovery, but mean you do not truly control your funds — "not your keys, not your coins."
Proof of Stake
A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they have staked as collateral, rather than computational power.
Liquidation
When a leveraged trading position or undercollateralized loan is forcibly closed by a protocol to prevent losses exceeding the deposited collateral. Liquidation typically happens automatically when the collateral value falls below a set threshold.