Why Are Multisig Wallets Considered More Secure for Institutional Cold Storage?

A multisignature (multisig) wallet requires multiple private keys to authorize a transaction, rather than a single key. For example, a 3-of-5 multisig requires three out of five designated key holders to sign off.

This prevents any single point of failure, such as a single person being compromised or losing their key. It adds a layer of redundancy and governance, making it ideal for organizations managing large amounts of funds.