What Is a ‘Multi-Signature’ (Multi-Sig) Scheme and How Is It Used in Cold Storage?

A multi-signature (multi-sig) scheme is a cryptographic requirement that a transaction must be approved by a predetermined number of private keys (signatures) out of a total number of keys (e.g. 3-of-5).

In cold storage, multi-sig is used to distribute the control of the assets across multiple physical locations and/or individuals. This prevents any single person from being able to unilaterally access or move the funds, significantly increasing security and mitigating insider threat risk.