"Understanding Multisig Transactions in Bitcoin"
Multisig transactions (short for multi-signature transactions) are a type of Bitcoin transaction that involves more than one signature to authorize the transfer of funds.
In a traditional Bitcoin transaction, the owner of the private key associated with a Bitcoin address can authorize a transfer of funds from that address. However, with multisig transactions, multiple parties are required to authorize the transfer.
For example, a 2-of-3 multisig transaction would require signatures from two out of three parties involved to authorize the transfer. This can be useful for shared control of funds, increased security, and more complex payment scenarios.
To create a multisig transaction, a Bitcoin address is generated using a script that requires multiple public keys to unlock the funds. When someone wants to spend from this multisig address, they need to provide a transaction that is signed by the required number of private keys.
Multisig transactions can be used in various settings, such as businesses that require multiple people to sign off on transactions or for custody solutions where a third party holds some of the keys needed to access the funds.