Crypto Alphabet

Creating a multi-signature wallet

One of the biggest advantages to cryptocurrencies is the ability to have programmable money or smart contracts. These are basically transactions that execute automatically given that certain predetermined conditions are met. One of the most basic forms of programmable money is multi-signature addresses also known as multi-sig.

Multi-signature addresses are like joint bank accounts where the transactions must be authorized by more than one signature holder. This is very useful in order to execute transactions where trust hasn’t been established or to create community managed funds.

Today you will see how to easily set up a Multi-signature wallet using BitPay app, a supported distribution of Copay, including built-in integration with the BitPay Card. Bitpay does not store your private keys and has an intuitive user interface. However, validation in Copay is centralized, meaning that you have to trust the wallet provided to keep a legitimate copy of the blockchain.

Part 1. Download and install the wallet

  • Visit the BitPay download section and choose the version that best fits your Operative System.

  • Once the download is complete install the Setup.

Part 2. Create and backup wallet

  • Launch your installed BitPay app and click “Get Started”.

  • You’ll be shown three educational slides about Bitcoin and BitPay. When you reach the last one you’ll be prompted to create a new wallet. Click the “Create bitcoin wallet”.

  • Now you’ll be prompted to backup your wallet. You’ll be shown a seed phrase, which allows you to restore access to your wallet anywhere. Backup your wallet seed and store it safely.

  • Write down your 12 seed words or store them in a file. When you’re done click “I’ve written it down”.

  • Now you’ll be asked to rearrange words to form your seed. This shouldn’t be a problem since you’ve written it down. Click “Confirm” when you’re done.

  • Now Agree to the Terms and Conditions and click “Confirm & Finish”.

Part 3. Create a Multi-Signature Wallet address

  • Now it’s time to create a multi-signature wallet. Click the plus sign on the right upper side of the “Wallets” tab.

  • Click “Create shared wallet” to start a multi-signature address.

  • Choose the name of the wallet and your username in the shared wallet context.

  • When that’s done, it’s time to choose the number of signature holders (1) and the required number of signatures to authorize a transaction (2). This is the most important part because it will define the nature of the multi-signature wallet. If you choose an account with 3 signature holders but only 1 signature required, any of the 3 signature holders can withdraw funds on it’s own. If you create a wallet with 3 signature holders and 2 required signatures, it will create a perfect environment to hold funds between two users and a middleman.

  • Your multi-signature wallet has been created and it’s ready to receive new key holders. Just share the code shown to invite your co-signature holders.

Part 4. Join a Multi-Signature Wallet address

  • In order to join a Multi-signature wallet created by somebody else, click the plus sign on the right upper side of the “Wallets” tab again.

  • This time you should click “Join shared wallet” to join a multi-signature address.

  • Then enter your nickname and invite code.

That’s it! You are now the co-owner of a Bitcoin multi-signature wallet.