Setting up a multi-signature wallet (full tutorial).

[Raqeebzy 6456]

Hi, fellow forum members.

Prior to my initial topic on multi-signature wallets and the response received, I was prompted to make a topic (full tutorial) on how to go about setting up a multi-sig wallet for newbies, beginners and those who have no idea about it.

In the initial post, I recommended three wallets with multi-signature properties (of course there are couple of others, list was based purely on preference and personal recommendation); Electrum, BitPay and BitGo

wallets. Basically, I believe learning how to setup one gives a whole lot of ideas on how to go with others.

 

So here we are!. This tutorial is based on Electrum desktop wallets (get one if you don't have, preferably from Electrum official website) which is the most used of the mentioned.

 

Setting up

Step 1: After successful download and install of the electrum wallet, launch it and connect it 'Automatically' to server. A window like the image below appears.

 

Image 1

Edit with your preferred name and click 'Next' to proceed.

 

Step 2: 

 

Image 2

Like in image 2 above, you will be asked what type of wallet you want to create. Of course you know what to choose - Multi-signature wallet. Next.

 

Step 3: By default, the configuration is set at 2-of-2 - two co-signers is required from total 3. The buttons as shown in image 3 below can be dragged to the desired configuration. In this tutorial, we'll show 2-of-3  two co-signers required from total three. 

Image 3

After that, click on 'Next' button.

Step 4: 

 

Image 4

The fourth step is creating a new seed since it is a new wallet like in the above image and also choosing the seed/address type (Segwit or Legacy). Differences between the Segwit and Legacy wallet is shown in the table below: 
 

 

 Choose the seed type; 

 

Image 5

And upon clicking on the 'Next', the wallet seed phrase appears.

 

Image 6

The 12 words seed is practically the most important of the wallet as it will be used in backing up in case of change of device or other things. It should be kept strictly personal in a safe place. 
After writing it down or printing it out, you will be required to input it again in the next step. It is to be input in the same particular order as revealed recently. Confirm it and click on 'Next'.

The public keys are then generated immediately (to be written or save also) and shared to all other co-signers on a different desktop/wallet (two in this case/configuration) who must have also followed all the above steps.
 

Image 7

After each and every co-signers (three in this case) have gotten their public keys and shared with one another, they can proceed to add one another (after clicking 'Next') as shown in step 5.

Note: Adding co-signers is done with public keys not your seed (private).

 

Step 5: Adding the second co-signer using the second public keys; 

 

 

Image 8

Then proceed with 'Next'.
Adding the third co-signer with the third public keys; 

 

Image 9

Note: 

• You are the first co-signer with the first private keys
• It doesn't matter in what order the other co-signers are added.

After clicking on next from step 5 (image 9), the wallet is set and ready for use.

 

Image 10

Now, in case of a personal use with a single PC/wallet, after getting the first seed and address, the wallet application can be closed and launched again to get the second (following the above processes) likewise, for the third.

Then after getting all the seed/public keys (which is advisable to be stored separately), each and every signatory can then be logged in (using the seed as shown in images 11 and 12 below) and the other signatories to be added using their corresponding public addresses.
 

Image 11

And;

 

Image 12

Recieving to an Electrum multi-sig wallet

 

Image 13

Recieving to an electrum multi-sig wallet, just like in normal wallet is as simple as clicking on the 'Receive' tab and copy the recieving address from the window or scan through the QR code. After receiving, the balance and the transaction history is visible to each and every signatories.
 

Sending from an Electrum multi-sig wallet

 

Image 14

 

After clicking on the 'Send' tab, the transaction details (address, amount, fee and description) is entered correctly and you click on send.

Image 15

From image above, it is shown the transaction is not partially signed (1/2), another signatory is needed to broadcast the transaction. Therefore, the transaction can be saved and sent to other signatory(ies) by clicking on 'Export' and saved as a .trx file. The transaction file can then be sent to or open by (in case of personal) other signatory by clicking on 'Tools' and 'Load transaction' as shown in the image below.

 

Image 16

After loading the transaction file successfully, it can then be signed and broadcast.

 

Image 17

It is very advisable to test up a newly created wallet with micro (very small) amount of crypto before sending in huge or big amount to avoid total loss of assets.

 

Thank y'all for reading. Contributions and corrections are very well welcomed.

Edited October 22, 2020 by Raqeebzy
A crucial step missed

[GanBin 705]

You have really tried, but multi-signature wallet will not be good for newbie, it will be good for people that know a lot about wallet. I do not bother yet to read you article in full, because it I difficult for me, I will visit this page often now to read about this type of wallet, with time, I will get you rightly. 

[Raqeebzy 6456]

On 10/25/2020 at 9:26 PM, GanBin said:

You have really tried, but multi-signature wallet will not be good for newbie, it will be good for people that know a lot about wallet. I do not bother yet to read you article in full, because it I difficult for me, I will visit this page often now to read about this type of wallet, with time, I will get you rightly. 

Without being self appraising, this is a good, constructive and detailed tutorial I have put together. If you are new to cryptocurrency and wallets, it is just right you won't understand anything this is all about.

Don't rush it, one step at a time. 

I encourage you to know what wallets are all about, their categories and their difference in operation. You can then read on multi-signature wallets, I made an article, you can check it.

After that, you are promised to find this article helpful.

Thanks.

[Jandancoin 482]

Multisig wallet will be for companies that want to hold coin, they can give he keys to some officials to hold, while some officials will be able to use the wallet to make transactions, it is a very secure wallet. This tutorial is nice, it explains all about multisig. 

[snowflake97ss 10]

Thanks for your very detailed guideline.

But it seems hard and complicated to setup

[kyoukage01 3181]

On 10/22/2020 at 5:09 PM, Raqeebzy said:

The fourth step is creating a new seed since it is a new wallet like in the above image and also choosing the seed/address type (Segwit or Legacy). Differences between the Segwit and Legacy wallet is shown in the table below: 
 

 

If I was a newbie trying to make a multisig wallet for the first time, does choosing one of the choices in the quote have a significant impact in the future? AFAIK, Bitcoin's Lightning Network (related to Segwit) has not been fully implemented yet. And what will happen to the Legacy addresses by the time of implementation?

 

So, would it be better if the Segwit option would be chosen at this time to prevent future snags?

 

[Raqeebzy 6456]

8 hours ago, kyoukage01 said:

If I was a newbie trying to make a multisig wallet for the first time, does choosing one of the choices in the quote have a significant impact in the future? AFAIK, Bitcoin's Lightning Network (related to Segwit) has not been fully implemented yet. And what will happen to the Legacy addresses by the time of implementation?

 

So, would it be better if the Segwit option would be chosen at this time to prevent future snags?

 

First of all, Segwit is like an upgrade on the blockchain which reduces the bytes of transactions to be stored in blocks and which in turns makes it a lot faster and lesser fee.

In multi-sig wallets, once you choose your key/address type to be Segwit, you can't change it back to Legacy and so is the other way round. 

Funds in Segwit addresses can be sent to Legacy, but the other way is not compatible with all exchanges and wallets - some are selective. Reason why I will go with Legacy for now.

[tienda 8776]

Dear friend @Raqeebzy very good topic with good explanation about Multi-Signature wallet. But I think this is a big topic, for newbies will be hard following you! I have a suggestion for you, maybe will be better for you dividing this topic in three topics parties, is good for you to have three topics and is good for users to follow you step by step through small topics. What do you think?... But this is just a suggestion!

[Raqeebzy 6456]

12 minutes ago, tienda said:

Dear friend @Raqeebzy very good topic with good explanation about Multi-Signature wallet. But I think this is a big topic, for newbies will be hard following you! I have a suggestion for you, maybe will be better for you dividing this topic in three topics parties, is good for you to have three topics and is good for users to follow you step by step through small topics. What do you think?... But this is just a suggestion!

I think in the tutorial, I tried as much as possible to make it self explanatory. Maybe some other times, I might take your suggestion into consideration and divide it into parts or volumes. 

It is a good suggestion for the sake of readers and especially beginners.