Multisig is the abbreviation for Multisigniture which was created to be a different option for single-key addresses. multisig then refers to the process requiring more than one party to authorize a transaction through multiple keys in a crypto transaction, which avoids:
- Single-point failures, making it difficult to be accessed by a third-party.
- Losing your wallet, thanks to an M-of-N backup.
- Single access control, which means you are required to have at least two participants to agree in the transactions to release the funds.
How does multisig work in WhalesHeaven?
In WhalesHeaven we operate in a 2-of-2 multisig wallet, so when you participate in an auction the deal process is based on multi-signature wallets between the seller, the buyer, and our platform. This is to provide an extra layer of safety to ensure that all the funds you send in an exchange are protected and can only be released once you have given the approval to release them from your wallet.
The process in WhalesHeaven is as follows: once you have topped up your funds, they will be transferred into a multi-signature wallet that both the buyer and seller have to provide their transaction approval on. Once all approvals are in place, the platform signs both transactions, and the tokens are traded wallet-to-wallet.
Why multisigs and not atomic swaps?
Multisig wallets have been around for several years, but have had an unreasonable lack of attention from the industry. They are a highly secure mechanism for collaborative control of funds.
Multisig wallets are much more agile in terms of shaping the deal and are much easier to understand and verify for non-tech-minded people. Atomic swaps, while also being highly secure, cannot be used to organize one too many trading scenarios and some other trading cases.
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