Multi-sig for Bitcoin holders in my category?

taufik123

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Quote from: dkbit98 on June 23, 2023, 02:20:10 PM

Bitcoin multisig is always a good idea to consider if you plan to hold coins for longer amount of time.
0.01 BTC might not be a huge amount of money for everyone, but this can change in future and in some countries this is still decent amount of money.
You don't need to have anything special to start multisig setup but it's best to do it with one offline device (laptop, smartphone or hardware wallet) and first make sure to test everything.
If I was in your place I would start simple, nothing complicated with multisig for newbies.

Even using something new related to security will provide a new experience.
Multi-Sig is definitely worth trying even if you only have 0.01 BTC and there is no restriction on having a certain amount of BTC.

As you said, 0.01 BTC in the future might be very valuable and worth more than it is now.
Maybe when BTC reaches $100k or $1 million ATH it will provide more profit.

Multi-Sig is quite simple to do with 1 device, and there are also options to use 2 devices using Blue Wallet.

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Quote from: Alphakilo on June 20, 2023, 06:19:17 AM

I recently came across multi-signature (multi-sig) wallet technology. I am still studying it, but I am wondering, as a small Bitcoin holder with less than 0.01 bitcoins, if I should really be concerned about using it. Considering that I am an average user, do you recommend multi-sig wallets for Bitcoin holders in my category?

Bitcoin multisig is always a good idea to consider if you plan to hold coins for longer amount of time.
0.01 BTC might not be a huge amount of money for everyone, but this can change in future and in some countries this is still decent amount of money.
You don't need to have anything special to start multisig setup but it's best to do it with one offline device (laptop, smartphone or hardware wallet) and first make sure to test everything.
If I was in your place I would start simple, nothing complicated with multisig for newbies.

Yamane_Keto

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Quote from: o_e_l_e_o on June 21, 2023, 07:24:36 AM

A multi-sig decreases the possibility of locking yourself out of your wallets; it does not increase it. If I can lose two keys from my multi-sig wallet before I lose my coins, then that is safer than only being able to a lose a single key from my single-sig wallet.

The complexity of the options increases when you use more than 2-of-3, as one can be left at home, another in a safe place, and the third in the bank’s safe. Increasing more than that may complicate the process.

Quote from: o_e_l_e_o on June 21, 2023, 07:24:36 AM

In a 2-of-7 you would need to lose 6 keys to lock yourself out of your wallet.

That's right, I don't know WTF what I was thinking about.

Medusah

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Yes, it's safe that way. You have to be careful when writing down the xpub though. A tiny mistake and you've added unnecessary work and the possibility to get locked out.

I would suggest to print them, but from my experience with printers, I wouldn't put much trust in them.

o_e_l_e_o

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Quote from: Medusah on June 22, 2023, 05:36:22 AM

Losing just one of the master public keys is enough to have yourself locked out. So you need to take care of that matter as well.

I always suggest backing up xpubs alongside each seed phrase. For a m-of-n multi-sig, you can back up n minus m specific xpubs alongside each seed phrase and still have full redundancy while preventing a single back up from revealing all your xpubs and therefore allowing an attacker to spy on you wallet.

Taking a 3-of-5 as an example, then alongside each seed phrase you need to back up 5-3=2 specific xpubs. My 5 back ups would look like this:

Back up 1: Seed A, xpub B, xpub C
Back up 2: Seed B, xpub C, xpub D
Back up 3: Seed C, xpub D, xpub E
Back up 4: Seed D, xpub E, xpub A
Back up 5: Seed E, xpub A, xpub B

Any three back ups provide everything needed to fully recover my wallet, whereas the compromise of one (and sometimes two) back ups does not allow an attacker to either steal my coins nor spy on my wallet.

Medusah

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Quote from: Alphakilo on June 20, 2023, 06:19:17 AM

I am still studying it, but I am wondering, as a small Bitcoin holder with less than 0.01 bitcoins, if I should really be concerned about using it.

If I had a properly airgapped computer, or a hardware wallet I would not. Otherwise, if I had two computers spared, both connected to the Internet and operating on a daily basis, I would.

Quote from: o_e_l_e_o on June 21, 2023, 07:24:36 AM

In a 2-of-7 you would need to lose 6 keys to lock yourself out of your wallet.

Losing just one of the master public keys is enough to have yourself locked out. So you need to take care of that matter as well.

pooya87

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Quote from: o_e_l_e_o on June 21, 2023, 07:24:36 AM

Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

Do not forget that the possibility of losing your money increases by not being able to withdraw it.

A multi-sig decreases the possibility of locking yourself out of your wallets; it does not increase it. If I can lose two keys from my multi-sig wallet before I lose my coins, then that is safer than only being able to a lose a single key from my single-sig wallet.

Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

or 2 out of 7 losing just 2 means losing your money.

In a 2-of-7 you would need to lose 6 keys to lock yourself out of your wallet.

But it makes very little sense for an individual seeking extra security through multisig to choose such a big n (in m-of-n multisig) as 7 and usually when you choose multisig as an individual you choose an m that is close to n like 5-of-7 or 6-of-7 instead of 2-of-7 which means the process of creating and storing is hard enough that increases the chance of losing the keys and access to the wallet.

NotATether

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Multisig wallets (where at least 2 co-signers are required) are immune to most common cryptojacking malware which just assume there is one wallet and one password to grab. So by using 2-of-2 Multisig, maybe 2-of-3 multisig so you don't accidentally lock yourself out, a lazy malware attempt can't just drain your wallet.

Of course, you still have to secure your device so that malware doesn't get on it in the first place, and Multisig is of no help against targeted attacks.

Z-tight

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Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

Do not forget that the possibility of losing your money increases by not being able to withdraw it.

The only thing that increases is your backups, if you choose a 2-of-3 multi-sig wallet, you have to back up three seed phrases in different locations and you also have to control three different devices that will hold your wallet file, it may be difficult for a newbie to do without messing things up

Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

Let's assume that you have a case of 5 out of 7, losing 3 keys out of 7 means losing your money,

If your multi-sig wallet is controlled by only you, there is no need to make it a 5-out-7 wallet, that is too many backups for you, except the funds are controlled by many people, that's when so many signatures is really necessary.

o_e_l_e_o

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Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

Do not forget that the possibility of losing your money increases by not being able to withdraw it.

A multi-sig decreases the possibility of locking yourself out of your wallets; it does not increase it. If I can lose two keys from my multi-sig wallet before I lose my coins, then that is safer than only being able to a lose a single key from my single-sig wallet.

Quote from: Yamane_Keto on June 21, 2023, 12:24:38 AM

or 2 out of 7 losing just 2 means losing your money.

In a 2-of-7 you would need to lose 6 keys to lock yourself out of your wallet.

Yamane_Keto

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At current prices, 0.01 bitcoin is about $300. The option to purchase a hardware wallet is not included.

Quote from: Alphakilo on June 20, 2023, 06:19:17 AM

Most of my coins are stored in my software wallet, while a few are kept on exchanges for quick transactions in case of emergencies (PS: I wouldn't be feel bad if the exchange shuts down).

You need to learn how to store cold storage using Tails, it is currently the cheapest and safest compared to other options.

Quote from: pooya87 on June 20, 2023, 08:32:01 AM

The indirect (or non monetary) cost is the extra effort it takes to set the wallet up correctly and safely and also to keep it safe specially when using the wallet each time you want to create a transaction. Depending on the number of signatures (eg. 7 sig!) it could be a tremendous amount of effort. Not to mention the time it consumes.

Do not forget that the possibility of losing your money increases by not being able to withdraw it.
~~Let's assume that you have a case of 5 out of 7, losing 3 keys out of 7 means losing your money, or 2 out of 7 losing just 2 means losing your money.~~

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Quote from: Little Mouse on June 20, 2023, 06:30:47 AM

I didn't know that, have never had a look in the tx size when used multisig wallet. Mostly used in commercial tx (kind of joint account), so didn't bother to have a look.

Here are a couple of example transactions.

https://mempool.space/tx/39f7408cce01667633e28e76fb824ebf3f671d861f2a174596accde2ea858a49
This is a fairly standard 1-input 2-output transaction which uses all standard P2WPKH segwit addresses. If you scroll down and click on "Details", you'll see the actual transaction data which is being paid for by the fees. The total size of the data for this transaction is 140.25 vbytes.

https://mempool.space/tx/68abd912ebd0e0303c803e61a70418cb6fd56fd4700a1d4f1560b26e06dd9249
Here is another segwit 1-input 2-output transaction. However, this one uses a 2-of-3 multi-sig for the input, and sends the change back to the same 2-of-3 multi-sig. Click details on this and you'll see the transaction data is much larger. Instead of the input containing one signature from the one public key as it did above, it now contains 2 signatures from 3 public keys. This means instead of the input being 68 vbytes, it is now 104.5 vbytes. You'll also notice that sending the change back to the multi-sig address also uses slightly more data. A P2WPKH output takes 31 vbytes, while a P2WSH output takes 43 vbytes. All in all, this transaction is 188.5 vbytes, so around 48 vbytes larger than the one above.

pooya87

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Quote from: Little Mouse on June 20, 2023, 06:30:47 AM

Since multisig wallet doesn't cost you anything extra,

That's not entirely accurate. There are in fact two additional costs to using multisig.
The direct cost is the increased fee. A mutisig transaction requires multiple signatures and public keys to be included in each transaction so the transaction size will be bigger than a single-sig transaction. So you pay more fees.
The indirect (or non monetary) cost is the extra effort it takes to set the wallet up correctly and safely and also to keep it safe specially when using the wallet each time you want to create a transaction. Depending on the number of signatures (eg. 7 sig!) it could be a tremendous amount of effort. Not to mention the time it consumes.

Little Mouse

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Since multisig wallet doesn't cost you anything extra, I don't see why wouldn't you use one if you thinking of your wallet security. As shared by DaveF, you should be concerned enough when creating multisig. Make sure you have two separate device at least.

Edit-

Quote from: pooya87 on June 20, 2023, 08:32:01 AM

That's not entirely accurate.

Thank you for the correction. I didn't know that, have never had a look in the tx size when used multisig wallet. Mostly used in commercial tx (kind of joint account), so didn't bother to have a look.

DaveF

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If you do it properly, multi sig is very secure.
If you do it improperly, it's no more secure than anything else.
A secure method two devices one of which is preferably not Internet connected holding your keys an. A non secure method just having them both on one PC.

The more you have separated the better it is.
The other question then becomes what works for you, 2 of 3 or 3 of 5 or 4 of 7 and so on.
For that choice a lot of people could give you advice. But you have to figure out what is going to work for you.

That, or get a hardware wallet. Which also works quite well. Once again, there are dozens of them you have to figure out what works for your particular situation and how you want to do things.

Starting now, where you have a smaller amount of coin makes it a lot easier to get into and stay with good security practices. After you've accumulated more and you've had no issues, it's easy to say meh I don't have to worry about it all these people are too paranoid. But if you've been doing it since the beginning you don't have to get into a more secure habit you've already been doing it so you're already there.

-Dave

Alphakilo

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I am a small Bitcoin holder with less than 0.01 bitcoins. I understand to some extent the importance of keeping my coins safe. Most of my coins are stored in my software wallet, while a few are kept on exchanges for quick transactions in case of emergencies (PS: I wouldn't be feel bad if the exchange shuts down).

I recently came across multi-signature (multi-sig) wallet technology. I am still studying it, but I am wondering, as a small Bitcoin holder with less than 0.01 bitcoins, if I should really be concerned about using it. Considering that I am an average user, do you recommend multi-sig wallets for Bitcoin holders in my category?

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