Multi-signature (Multi-Sig) is an advanced cryptographic technique that provides enhanced security by requiring more than one key to authorize a transaction. In the context of Bitcoin, this means that multiple private keys must sign a transaction before it can be broadcast to the network.
This means that an attacker would need access to all the keys in order to successfully steal funds — a much more difficult task than simply obtaining one key. Multi-signature is a useful tool for both individual and corporate users of Bitcoin. It is particularly useful for situations where multiple parties are involved in authorizing a transaction, such as the establishment of escrow accounts or multi-user wallets.
Multi-signature works by having multiple public keys in a given transaction. Each public key corresponds to a different private key owned by an individual or institution; this ensures that more than one person has to approve the transaction for it to go through.
The multi-signature system also allows for varying levels of access based on the number of keys needed to authorize a transaction. For example, three out of five keys might be required for a transaction to be successful. Overall, multi-signature is an important aspect of Bitcoin security, as it significantly reduces the risk of major thefts from an account since more than one signature is required in order to authorize a transaction.