How to Fortify Your Funds Using Yodaplus Multisig Vault?
While learning about new upcoming technology, we often wonder why it came to be in the first place. What inspired it, what problem it needed to solve. So while learning about Multisig Wallets, when you ask why? Many of the answers lead to the same place.
For extensive security!
Security has been a significant concern for generations, way before everything we've ever known. It ranges from keeping your diary safe in locked cupboards from when we were kids to safeguarding your property and wealth assets with banks. However, securing anything can be very tricky if not done right.
Multisig does it right!
Multisig, multi-signature, the name in itself sounds reassuring. It is mainly because it reminds you of the extra layer of security it provides you with. Nowadays, with digitalization hitting all sectors equally hard, converting from physical to virtual often increases the value of a particular good. But the online world is terrorized by malicious threats which need to be managed.
Before understanding how it's done, we need to address the variations multisig wallets come with.
The most secure types of Multisig Wallets
- M>.5*n Consensus Account
This is often called the Classic Multi-sig Wallet, a 2-of-3 wallet. This is the sweet spot of multisig wallets. The standard type of wallet. The responsibility is distributed amongst the keyholders/signatories, eliminating a single failure point.
2. M<.5*n Buddy Account.
They are typically used for corporate accounts with more people involved. Less convenient than the first time but much more secure. Multiple key combinations exist, hence increasing the layers required to get to the funds.
Problems with the Traditional Crypto Wallets
The traditional solutions did not provide complete ownership to the fund owners and lacked transparency. Also, it has been observed that vast sums of assets are lost from crypto exchanges.
If we look at the recent events, Bitmart has experienced a large-scale security breach of around $150 Million in assets.
The safe custody of crypto wallets has become a severe issue, and self custody of keys has emerged as a haven. Let me brief you on the various problems faced by crypto holders.
- Hacking of crypto exchange
Hackers find crypto exchanges the easiest target to carry on scams and frauds. This is because the attackers get illegitimate access to the users' funds on the exchanges. E.g., Binance lost 7000 BTCs to hackers in May 2019, and 340,000 Ethers were stolen from UPbit in November 2019.
- Unauthorized control of user accounts
If the wallet is lost in the case of single users, it might not be recovered. Sometimes, the password, username, or two-factor authentication might be lost or stolen. In addition, the email address can be stolen or hacked, the phone may be lost, or the number may be ported to another device.
- Frozen accounts
Crypto exchanges might suspect some malicious activity. In that case, the exchanges would freeze the wallet and crypto account to prevent you from trading or withdrawing your funds.
- Insolvency risk
At any uncertainty, the reserves maintained by exchanges might not be sufficient. In case of hacking or any default in exchange, the exchange owners become liable to settle the crypto owners' incurred losses. But, the funds might be insufficient due to price volatility.
With the increase in digital currencies and cryptocurrency transactions, individuals search for ways to store their funds securely online. But, unfortunately, it's easy for one to lose the key or get hacked into with traditional single-key wallets.
Fortifying your Fund Security
Multisig wallets have multiple keys which can be stored in different places. So, for example, if your wallet has three keys, you can store one on your phone, one on your laptop, and one physically on a piece of paper. In this way, if your computer is hacked, the hacker won't have access to the funds in your wallet because they will only have the key stored on the laptop.
So, as an example, think that an organization has stored some funds for a particular project in a multisig wallet, with a 2-of-3 combination. The 3 keys can be distributed in the following ways:
Key 1: The CEO of the organization. This is typically the owner of the wallet's address, often called a master key.
Key 2: The person (manager) manages the project as a whole.
Key 3: Stored physically on a piece of paper in a safe place.
This ensures maximum safety.
It's also useful in the situation when you lose one of the devices in which you have stored your key. You can access your wallet with the remaining two keys. If you have the option to choose between an N-of-N wallet or an M-of-N wallet, always prefer the latter to provide yourself with a backup.
Conclusion
With multisig wallets, we have the reassurance of multiple layers of protection we usually lack. This provides us with peace of mind and helps the technology advance. Fortifying your funds is one of the default characteristics of multisig, and it lives up to the expectations.
If you want to create your own Yodaplus Multisig Vault, you can just make it right here — https://www.yplusvault.com/
And, in case you are stuck somewhere, refer to this guide — https://help.yplusvault.com/
You can always comment below to let me know your experience.
Further Readings:
How to do Escrow Transactions using Yodaplus Multisig Vault?
