The Multisignature Wallet: Shaping the Next Wave of Personal Finance
With the global digital economy advancing at breakneck speeds, one of the most significant issues that innovators have had to grapple with is that of security. No industry is immune to the threat of cybercrimes, spawning entire teams of policy makers and regulators who are constantly creating new ways to remain one step ahead of financial fraud in today’s connected world.
One way to combat this problem is by using the multisignature wallet — a secure storage medium for managing digital assets such as cryptocurrencies. Essentially, a multisig wallet adds layers of security to protect your digital assets, just like a joint bank account would in the physical world.
Here are three reasons why each and every one of you should sign up for one moving forward:
Keeps your digital assets more secure with multiple signatures
Moving back to the issue of cyber security, hackers of today are using sophisticated means of social engineering such as phishing to coerce their targets into providing their passwords for criminal purposes. This risk is highly negated when more than one signature is required to access your funds.
The multisig wallet requires two or more sign-offs for any transaction to take place, reducing risks of theft or misappropriation considerably. Security is also enhanced by increasing the number of signatures.
Gives you access to your funds even if you lose one password
There is no central repository of passwords for digital assets — this essentially means that with a single authentication account, no one can help you retrieve your password if it’s lost. According to the Wall Street Journal, a fifth of all Bitcoin (approximately US$20 billion as of 2018) is lost permanently. The multisig wallet wants to solve this issue.
Using a simple analogy, say you sign up for a two-of-three signature wallet (where a minimum of two signatures are necessary to access the account), you may decide to keep one password on your computer, one written on a piece of paper in a safe deposit box and the third in your mobile phone.
If you lose either your phone or computer, you can still access you funds with the other two keys kept in separate locations securely. And, if someone steals your phone, he/she will also need access to your computer or the safe deposit box to log into your account — the probability of this is highly unlikely.
Protects you from security threats and facilitates better business processes
Companies that transact heavily in digital assets, for example, may not want one board member to have sole rights of funds at any given time. If they sign up for a four-of-five wallet, a board with five members will need the majority (80%) to agree before any financial decision is made. The adoption of such wallets will reduce the chance of internal fraud and disputes considerably.
Though it is unlikely that the private keys of four of those five wallets are stolen, this undesirable situation may still take place, leading to the theft or misappropriate use of the wallet.
To further improve the security of a multisig service, SpaceChain uses a space node as one of the parties to approve a multisig transaction. The risk of physically destroying the space node is reduced greatly as it runs on orbit around the earth. In addition, the measurement, control and data transmission of the space node uses the aerospace-specific code encryption protocol and communication band, making the data hard to be decrypted.
The space node also uses the hardware architecture and operating system tailored for the aerospace industry, which increases the difficulty of cracking. Thus, space nodes are one of the best choices for third-party nodes for multisig transactions.
On December 5, 2019, SpaceChain launched a testbed for a two-of-three multisig transaction authentication in space aboard a SpaceX Falcon 9 rocket from the Kennedy Space Center. The payload was sent to the International Space Station and is the first blockchain hardware installed there. Read more here.
Upon activation, the payload will demonstrate the receipt, authorisation, and retransmission of blockchain multisig transactions. SpaceChain’s implementation adds the remoteness and security of space infrastructure to blockchain technology to lay the foundation for a new generation of products built on its technology.
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