Multi-Signature Protocols are cryptographic protocols that mandate multiple distinct digital signatures to authorize a transaction or execute a smart contract. This enhances security and establishes shared control over digital assets.
Mechanism
A multi-signature wallet or contract is configured with a predefined threshold, for instance, a 2-of-3 requirement. This means a transaction necessitates approval from a specified number of participants, each holding a unique private key, before it can be processed and recorded on the blockchain.
Methodology
Implementation involves generating and distributing multiple private keys, each controlled by a separate entity or system component. These protocols are fundamental for institutional asset management, joint ventures, and treasury management in crypto, providing robust governance and mitigating single points of failure.
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