Multisignature Wallets: The gold standard for companies
As DeFi and digital assets go mainstream, more and more companies are exploring ways they can get into crypto. The first step is selecting a wallet to hold funds. There are three main kinds of wallets that store crypto today: individual hardware wallets, individual software wallets, and multisignature wallets. At Multis we believe multisignature wallets offer the best compromise between security and convenience and are uniquely suited to a company’s structure and needs.
Security: The top concern when storing crypto
Wallet security should be the top priority for companies holding crypto. When choosing a wallet, companies should always look for ones that have been thoroughly audited by recognized security professionals in the industry (for example, OpenZeppelin has publicly audited the security on the Gnosis multisignature smart contract). Another key aspect to consider is having ownership over your company’s funds — many wallets have partial or complete control over passwords, or “private keys”. Finally, companies should choose a wallet that allows multiple owners access at the same time.
The Multisignature Wallet: A Better Approach to Wallet Security
Individual browser wallets (like Coinbase Wallet, Brave, Opera) have emerged as one of the most popular choices for holding crypto. This is due in part to great UX. However, with browser wallets you are not the true owner of your private keys — this means the wallet provider is ultimately the one holding your funds. If a wallet gets hacked your funds are directly at risk (12 major crypto exchanges were hacked in 2019 alone with over 292 million dollars in funds stolen).
On the other end are hardware wallets, which are the safest option for individuals. Here, crypto is rarely “online” and there are limited opportunities for hackers to access your funds. However, hardware wallets are risky for companies. If a company stores all its crypto in one hardware wallet, one individual can still take the wallet and run. Lost key recovery is another problem for both of these wallet types. If you lose access to your private key it is almost impossible to recover your funds (a serious problem if your company is storing its funds in one account).
Multisignature (or “multisig”) wallets lock your funds into a smart contract, and all transactions can be verified on-chain. No funds are held in the browser and there is no wallet provider managing your private keys. There are many multisignature wallets available that have been audited. Gnosis Safe and the Aragon Multisig are two examples that have been battle-tested, publicly audited, and have passed multiple bug bounty rounds.
Multisignature Wallets are built for teams
Next, multisignature wallets provide another layer of security by giving companies the opportunity to create “shared ownership” over one wallet (as opposed to the CEO holding a private key or owning a hardware wallet for the company). With a multisig, a pre-defined majority of “owners” need to approve a transaction before it gets sent. Spending limits and other restrictions can be encoded into the approval rules of the wallet as well.
Built In Key Recovery
Multisignature wallets provide an easy and secure method for key recovery. “Owners” can vote to give new members access to the wallet over time. If an individual loses their private key, members from the group can vote to give access to them on a new account. Multisignature wallets allow for a long-term approach to holding funds.
Multis — Building Features on top of a Secure Multisignature Wallet
Multis has built a suite of features that provide even more security sitting on top of the Gnosis multisig wallet. New owners can be added to a wallet by using standard email invites. Owners also receive email notifications on transactions occurring in their company’s wallet. Companies can use the Multis dashboard to view transaction history, set approval rules, and approve transactions — all of which make it easier to keep your funds secure over time. Multis takes security seriously, and you can read more about our approach here.
Convenience — Multisignature Wallets are Built for The Cryptoeconomy
Speed and Flexibility Are Key
Companies, especially those in high growth stages, need to have fast and secure access to their funds. This is especially true for crypto companies managing a high volume of crypto intake, such as Dapps like OpenSea or protocols like Kyber. A company’s wallet choice has a direct impact on how conveniently these funds can be accessed.
Hardware Wallets are Great For Security, Clunky For Companies
Hardware wallets are a great choice for an individual looking to securely lock up their funds, but they are not designed for companies. Unless a company wants the CEO to have complete control over company funds, it must find a way to split fund access between employees. What’s more, hardware wallets are not set up for remote workplaces.
Additionally, hardware wallets were not designed to plug into the fast-paced online world of Decentralized Finance or “DeFi”- they aren’t built for countless major and micro transactions that any company leveraging crypto encounters on a daily basis. Bringing funds out of “cold” storage creates friction and the usage flow is clunky. A main advantage of crypto is the ability transact in an online setting, and software wallets are better suited for this.
Browser Wallets Have Great UX — But Not Designed To Interact With DeFi Services
Browser wallets are more convenient for storing your funds online however they are not made to interact with the DeFi network of services. With browser wallets, it’s hard to track inbound and outbound transactions, and accounting flows can quickly become difficult to manage for companies. Companies that manage crypto cash flows from different sources at once (token swaps, revenues, fees, etc) have an even harder time tracking spending and can spend inordinate amounts of time going through transaction logs to determine how funds were used.
Multis: A Multisignature Designed for Companies
It’s possible to have the convenience of a software wallet that is also designed to interact with DeFi services. Multis provides a software-based multisignature wallet with features and functions built specifically for crypto companies.
First, Multis allows companies to send and receive crypto from a single company address. This makes it easy to perform essential business operations like sending invoices and paying employees. On top of this, Multis provides a dashboard where companies can view all assets and transactions. Transactions are broken down and organized so fund managers know exactly where their funds are being sent and invested at all times.
Multis also helps companies perform important accounting and metric tracking. The multisignature wallet tracks transactions with labels allowing companies to organize transactions by type. Companies can also view historical conversion rates and other transaction data in a way that’s easy to understand. Multis built-in address book makes it easy and secure to make regular payments like payroll and subscriptions.
Multis is designed to interact with other smart contracts on Ethereum as well. This gives companies the ability to grow their business and engage in the world of decentralized finance. Including:
- Invest their treasury and earn (Compound, Tokensets)
- Borrow (Aave lending)
- Insure funds (Nexus Mutual)
- and so much more.
Multisignature Wallets are the Way Forward For Companies
Multisigntaure wallets are the best choice for companies because they are designed for group fund ownership, and can easily connect to the “online” world of services on Ethereum. However, a multisig wallet alone is not enough for companies to manage funds. Companies should still be able to perform important functions like accounting, fund analytics, transaction monitoring, customized approvals, and more.
Multis delivers this by providing a product specifically built for companies with crypto. With Multis, companies can manage their funds, connect to the services of the DeFi infrastructure, and scale all at once.