Glossary
Multisig (multi-signature wallet)
Multisig is a wallet that needs signatures from several keys at once, for example two of three. How it works and how it protects against losing one key.
Multisig is a multi-signature wallet: spending requires signatures from a set number of keys out of several fixed at creation, for example two of three.
An ordinary wallet has one key, so losing it or having it stolen decides everything. In multisig, the “m of n” notation says how many signatures (m) you need out of all the keys (n). With a 2-of-3 setup, losing one key costs nothing, and a thief with one key gets nothing. We describe the most popular variant separately as a 2-of-3 wallet.
The keys are kept on separate devices and in separate places. A transaction is signed in turn, passing a file in PSBT format between the devices.
The price of extra security is extra complexity. To recover the wallet you need not only the keys but also the setup description, meaning information about all the public keys (including the xpub). Without it, a full set of keys can fall short.
Why it matters for your family
Multisig lets you split access so that no single person or place decides everything. Your family doesn’t get one secret phrase. They get several parts and a rule for combining them. Who this setup suits, and who finds it too complicated, is explained in the guide on 2-of-3 multisig wallets.