Bitcoin Multisig Security (UK): Reducing Single Points of Failure
A plain-English guide to multisig for UK holders: what it is, why it helps, and how to avoid common mistakes.
What is multisig?
Multisig (multi-signature) means more than one key is required to move funds. A common setup is 2-of-3: any 2 keys can sign a transaction. This approach is relevant for UK holders looking to reduce single points of failure in their crypto security setup.
Why multisig helps
Multisig can reduce risk from: a single device compromise (attacker needs multiple keys), one key being lost or destroyed (you can still recover with remaining keys), and one location being burgled (keys in different locations). It adds resilience without requiring you to trust a single point of storage.
What multisig does not fix
Multisig does not fix: poor recovery planning (you still need a documented process), phishing that tricks you into signing (social engineering bypasses technical controls), or storing all keys together (defeats the purpose entirely).
A practical 2-of-3 mental model
You hold two keys, and a third is held separately (or by a trusted party under strict rules). You can still move funds if you lose one key, but an attacker needs two keys to steal funds. This balances security with practicality.
Implementation notes
Many wallets can support multisig. Electrum documentation includes guidance on multisig wallet creation and operation — use official documentation for any tooling decisions. Keep it simple: complex schemes that no one can execute under stress are worse than simpler approaches done well.
Multisig and inheritance planning
If your estate plan depends on a single person finding a single phrase, it's brittle. A multisig plan can be paired with: a clear written process (no secrets in the document), a professional coordination pathway, and a rehearsal or verification step while you're alive. See our inheritance planning page and our guide on crypto inheritance risks and controls.
Common mistakes to avoid
All keys in the same home (defeats geographic distribution). Same PIN or passphrase reused across keys (one compromise exposes all). No test recovery (you don't know if it works until you need it). Complex schemes no one can execute under stress (simplicity wins).
When you should not use multisig
If you can't maintain operational discipline, a simpler cold-storage setup may be safer. Multisig requires ongoing key management. For some holders, a well-executed single-key setup with proper backups is more appropriate. See our crypto security page and how Bitzo works for guidance on choosing the right approach.
Frequently Asked Questions
What does 2-of-3 mean?
2-of-3 means you have three keys, and any two of them can authorise a transaction. You can lose one key and still access funds, but an attacker needs two keys to steal anything.
Is multisig only for large holdings?
No, but it's most often used for significant amounts where the extra complexity is justified. For smaller amounts, a well-secured single-key setup may be sufficient.
Does multisig remove the need for a seed phrase?
No. Each key in a multisig setup typically has its own seed phrase backup. You're managing multiple seed phrases, not zero.
Can Bitzo hold a key?
No. Bitzo never holds keys or has custody of your assets. We coordinate verification and documentation processes while you remain in full control of all keys.
How does multisig affect executors?
Executors need clear documentation about which keys exist, where they're stored, and how to coordinate signers. A multisig setup without proper documentation can be harder to recover than a single-key setup.
What's the simplest secure setup for most people?
For most UK holders: a hardware wallet for savings, a mobile wallet for spending, proper seed phrase backups in two locations, and a documented recovery process. Add multisig only if you can maintain the operational discipline.
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