There are many different ways to set up a Bitcoin wallet. But have you ever thought of a shared bitcoin wallet? Well, it’s really not that difficult to have one! Sharing gives your wallet extra security if it’s what you desire. The Bitcoin.com Wallet app doesn’t only provide you a secure place to store both you Bitcoin Core (BTC) and Bitcoin Cash (BCH), but also allows you the opportunity to create what is called a ‘Shared Wallet’.
This shared wallet is also known as multi-signature (or multisig) wallet. It is a kind of wallet that is accessible by two or more users. Before any spending from BCH could be approved on the account, it would require some authorization, at least, from one of the ‘cosigners’ of the wallet. Multi-signature wallet operates pretty much as a Joint Account in the traditional Banking system.
Importance of Shared Wallets
- Security: One major reason to have a shared account could be for security purposes. Even if it’s a single user who has more than one device, they can still create a shared wallet to secure every transaction on the wallet. This is because even if you lose, say your Smartphone to a thief, the person wouldn’t be able to spend from your wallet because it would still require another authorizing before any transfer would be possible.
- Accounting: For proper bookkeeping and readily accessible transaction history, especially when the funds are jointly owned, a shared wallet becomes very important.
- Voting on the usage of funds: It promotes inclusiveness of opinion among any group towards mutual funds since payments can’t be authorized except a certain threshold is met.
- Mediation or Third-party escrow: This is useful when making bets or making online purchases.
Five Steps to Creating a Shared Bitcoin Wallet
- First of all, download the Bitcoin Wallet app according to your device specification. There are options for Android, iOS, Windows, Linux and Mac.
- Go to the Home screen and tap the “+” in your Bitcoin Cash Wallet Menu and create a new wallet.
- From the “Add Wallet” menu, you select “Create shared wallet”
- Then set the ‘Wallet name’, ‘your name’, ‘total number of copayers’ and finally, the ‘required number of signatures’ required to send BCH from the shared wallet. (Note that the “Total number of copayers” is the number of persons or devices that will have access to the wallet and “Required number of signers” is how many of these persons or devices would be needed to manually authorize any transaction before it can be sent.)
- Finally, create the wallet and share the invite code with the persons or devices you want to join the wallet. (Note that this code could be scanned or alternatively, the block of text could be copied and pasted.)
A shared wallet is not essentially different from the normal wallet – each cosigner of a shared wallet has a unique key which gives them a partial access to the wallet. It is, also, of signal importance to ensure that all the cosigners backup their shared wallet(s).
If you create a multisig wallet that requires, say, 4-of-4 cosigners to authorize transactions, it will yield itself to complexities if one cosigner loses their device or didn’t back up. Or it could be a situation where one of the cosigners blatantly refuses to sign a particular transaction; funds in such wallet would be redundant and inaccessible. To avoid such situations, it’s advisable not to create wallets that require the signatures of all the participants.