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.
Glossar
Cold Storage
Storage ⎊ Cold Storage denotes the practice of securing private keys for cryptocurrency assets entirely offline, disconnected from any internet-enabled device, to provide the highest level of defense against remote hacking attempts.
Technology
Infrastructure ⎊ Technology, within cryptocurrency, options trading, and financial derivatives, represents the foundational systems enabling secure transaction processing and data management.