Security is an important aspect of the cryptocurrency world and holders of coins tend to look for ways to secure their transactions or spend their tokens in a safe manner. There are different systems that people use to improve the security of their coins in cryptocurrency wallets and addresses. One of them is through the usage of multi-signature wallets, which means that before a user can spend coins, they need multiple signatures. Some hardware wallets work with multi signatures, thereby reducing the risk of a single point of failure. Mobile wallets also have this feature, and sometimes, they may be open source.
Another type of cryptocurrency wallet is the Hierarchical Digital Wallet that stores the private and public keys for holders of cryptocurrencies. This means that anyone that has access to the digital keys can control what happens in the mobile or hardware wallet. HD wallets are the opposite of multisig wallets because a single signature is needed before a transaction can occur, meaning that the holder of the private keys can spend or transfer the funds in the wallet. Usually, a single signature wallet or Hierarchical Digital wallet comes with a seed phrase, which users can utilize to back up their keys and funds. In this type of wallet, be it hot or cold storage, only one key is needed to sign a transaction.
Is a multisig wallet more secure than a single signature wallet?
Multisig wallets remove the risk of a single point of failure because before a transaction is approved or funds leave an account, multiple signatories have to sign.
The wallet is secure and accessible, even when a single key has been misplaced. A typical multisig wallet needs two out of three signatures before a transaction is done. It means that even when an intruder accesses a key, they can’t move the funds since they do not have the other keys. Multisig wallets can be likened to a joint account, where multiple people have to sign before the money is spent.
As for the hierarchical digital (HD) wallet, the opposite is the case. Coins can be transferred, as long as the user has a private key, which makes it more susceptible.
Multisig vs HD wallets: Which wallet has the higher risk of being lost?
Single signature wallets have a mnemonic seed that is used to recover their backup version. Once the phrase is misplaced, the wallet won’t be accessible. This is why users of this type of wallet have to store the phrase in a secure place that they won’t misplace.
On the other hand, multisig wallets need multiple signatures, meaning that even when a signatory loses its key, other participants can sign a transaction.
What are the best multisignature and HD wallets at the moment?
The increasing need for the security of funds stored in wallets has prompted the release of more multisig wallets. Out of the numerous wallets in existence, some notable mobile ones are Guarda wallet, BitGo, and Electrum.
A notable mention of a multi-sig wallet is our wallet, WH Cypher. WH Cypher is a Multi-sig wallet extension created by us at WhalesHeaven, and it is designed to permit crypto traders and enthusiasts to sign the release of their transactions. Users can also join as a co-signer with the permission of existing users. Its feature ensures that the transaction destination is confirmed. Through this multi-sig wallet extension, users can carry out crypto trades on our exchange, WhalesHeaven or any other exchange without needing to give up their private details. Using this WH Cypher extension allows people to seamlessly sign in and trade securely on any exchange. The user interface was designed to offer intense user experience, and allow traders to have full control over their trading process.