Posted 2 years ago | by Ben Armstrong
Six Million Bitcoins Move to Mult-Sig Wallets
Almost one-third of the entire Bitcoin supply, six million Bitcoins (BTC), is secured by multi-signature wallets, which is a big shift from the early days of BTC. A Bitcoin is generally stored by using two keys, one public, and one private.
A transaction on the Bitcoin network requires users to sign each transaction with their private key. For small users, this might be an ok way to store BTC, but many investors are looking for ways to make storing BTC more secure, and harder to move quickly.
It might seem like a hassle to have multi-signature authentication to make BTC transactions. On the other hand, companies who hold BTC as a cash asset, or investment, don't necessarily want the BTC horde to move in a matter of minutes.
Making Bitcoin Harder to Move
There will be many problematic situations, such as what will happen in case a founder suddenly dies, gets hacked, or decides to engage in an ‘exit scam’?
With all of those situations, the exchange could be went down and users could lose their funds. In order to limit these such issues, a soft fork, which allowed the use of multi-signature wallets, was launched back in 2012.
A lot of Bitcoin is now secured in multi-sig wallets, where X out of N signatures are required to spend it. This architecture allows wallets are now controlled by multiple users, and no one user can spend the coins on their own.
Moving into the Real World
As larger investors move into the crypto space, tools like multi-sig wallets will likely rise in popularity.
The push to use them for a third of existing BTC is evidence of this, as larger investors tend to take the security of the assets more seriously than a smaller speculator who is looking for fast returns.
Things may change substantially as the fiat currency system continues to fracture, and the larger cryptos take on a greater role in the global financial markets.
While major banks aren't likely to adopt decentralized assets directly, it is probable that more people will demand stable assets that aren't subject to political control (See Venezuela for more on this).
Better Tools for Trade
As it stands today, any of the major Western governments or banks can create big problems for a person or company that falls into disfavor. These are hardly academic discussions, as the recent tribulations of Huawei and its management have demonstrated.