Certified Bitcoin Professional Practice Exam

What does a multi-sig wallet require in order for funds to be spent?

1. Only one signature

2. Two or more signatures

3. A biometric verification

4. A single code

The correct answer is: Two or more signatures

A multi-sig wallet, or multi-signature wallet, is designed to enhance the security of cryptocurrency funds by requiring multiple signatures to authorize a transaction. This means that in order for the funds to be spent, two or more distinct signatures from designated private keys are needed. This setup adds a layer of security, as having multiple signatures helps prevent unauthorized access and ensures that a consensus among co-signers is necessary for spending. In practical terms, this feature is particularly beneficial for organizations or groups that want to ensure collaborative control over funds, meaning no single individual has complete control. It’s also useful for providing a safety net; if one private key is compromised, the funds cannot be accessed without the additional signatures still being required. Thus, the necessity for two or more signatures encapsulates the fundamental principle of trust and security inherent in multi-signature wallets.