How Does Multi-Signature Technology Enhance Cold Storage Security?

Multi-signature (multisig) technology requires multiple private keys to authorize a transaction. For an exchange's cold storage, this means no single employee or single point of failure can compromise the funds.

To move the Bitcoin for physical delivery, a quorum of authorized parties (e.g. 3 out of 5 key holders) must agree, significantly mitigating the risk of internal theft or a single-key hack.