Multi-signature (multi-sig) is a security setup requiring multiple private keys to authorize a cryptocurrency transaction instead of just one. Commonly configured as "2-of-3" or "3-of-5," this means a specified number of authorized parties must approve before funds move. Multi-sig is essential for organizations, joint accounts, and high-value holdings, as it prevents single points of failure, reduces theft risk, and enables shared financial control while maintaining security.
Example:
A crypto company sets up a 3-of-5 multi-sig wallet holding $2 million in treasury funds. Five executives each control one key, but any transaction requires approval from at least three executives. If one executive's key is compromised or lost, the wallet remains secure. When paying a $100,000 vendor invoice, three executives must independently sign the transaction before funds can be sent.