What do I need to recover a multisig wallet?

You need the required number of seed phrases to sign a transaction. You also need the wallet descriptor, which includes the derivation path and all cosigner XPUBs, to fully recover the wallet.

Can I store my multisig seed phrases in a password manager?

Never upload your private mnemonics to the cloud or type them into a password manager, email, or photo roll. Keep your private seed phrases completely offline to protect them from hackers.

Do I need all hardware wallets in the same room to sign a transaction?

You can create and sign a transaction on one device to generate a partially signed bitcoin transaction file. You then move that file to the second device to complete the signing process.

Is it safe to use a passphrase on my multisig wallets?

Many users suggest avoiding passphrases on a multisig setup because it adds unnecessary complication. Having to manage multiple devices and passphrases correctly increases the risk of being locked out.

How to Set Up a Secure Multisig Wallet

Setting up a multisig wallet removes single points of failure by requiring multiple approvals. You need to plan carefully because recovering funds requires specific information beyond just the seed phrases.

Users recommend backing up all seed phrases, cosigner XPUBs, and the wallet descriptor file. You should distribute your keys across different locations and hardware vendors to maximize security.

Essential backups

Private seed phrases Keep the mnemonics for all required keys entirely offline.
Cosigner XPUBs Store the extended public keys for all wallets involved.
Wallet descriptor Save the derivation path and XPUBs, often exported as a PDF.

How to Set Up a Secure Multisig Wallet — infographic

Setting up a multisig wallet significantly enhances security by requiring multiple keys for transactions, but it introduces complexity that demands careful planning and execution.

Understand Multisig Fundamentals

Multisig increases security by eliminating single points of failure. "If a hacker gets access to just one device or private key, they still can’t move your funds."

Multisig is not a substitute for proper seed phrase backup. "If your hardware wallet is compromised, your entire setup will be compromised."

Consider multisig for significant holdings or shared control. "the recovery of a non-custodial 2/3 multisig wallet, what are the minimum pieces of secrets needed for recovery? I read that 2 seed phrases are enough to sign a spend transaction, but having those 2 only are not enough to recover your multisig wallet. What"

Essential Backups for Recovery

Backup all private seed phrases and all cosigners' XPUBs. "if you are using multi-sig with "2 of 3" or "3 of 5", every time you need to have the multiple devices on hand PLUS their respective passphrases correctly entered to unlock"

Store your multisig wallet descriptor. "Ideally your multisig wallet descriptor (wallets like Specter can export this as a .PDF for you) - essentially your multisig derivation path + all of the cosigners' XPUBs."

Never store private seed phrases digitally or online. "Never upload your private 12-24 word mnemonics to the cloud or even type them into your PC/phone password manager or email or photo roll."

Key Management and Setup

Distribute keys geographically and across multiple hardware vendors. "of this setup!? Also regarding the recovery of a non-custodial 2/3 multisig wallet, what are the minimum pieces of secrets needed for recovery? I read that 2 seed phrases are enough to sign a spend transaction, but having those 2 only are not enough to recover your multisig wallet. What else does one need as a minimum requirement to recovery? Please point me to a"

Test your multisig setup thoroughly. "Once a wallet is set up, do a test transaction back and forth, delete all wallets and try recovering it again to complete cycle."

Avoid using a passphrase with multisig to prevent over-complication. "Personally I wouldn't use a passphrase in addition to a 2-3 multisig."

Practical Considerations

You don't need all devices present to sign a transaction. "You can have one device at home, create a transaction and sign it. Then take that PSBP (partially signed bitcoin transaction), which is just a file, to the location of the second device, and sign it again."

Be aware of increased transaction fees for multisig. "Multisig transactions have more fees as well."

Understand that "swapping" a key usually means creating a new multisig wallet. "Some wallet software shows a 'swap' option that makes it look like you can add a new signer into an existing multisig but it will create a brand new wallet, it won't just 'swap' a key in your existing wallet."

Are you planning to set up a multisig wallet for personal use or for an organization?