Multi-Sig Wallet

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Multi-Sig - A historical Financial Innovation

At Valuete we strongly believe only technology can offer long lasting solutions. Most crypto companies have simply copied the old world model of banking into the crypto assets, however we believe crypto assets like Bitcoin offer certain qualities that are historical.

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2-of-3 Multi-sig wallet schema that Valuete uses

Escrow transactions

By creating a 2-of-3 multi-sig wallet, an escrow transaction between two parties (lender & borrower) that includes a third party (Valuete) as a mutually trusted arbiter can take place.

The borrower would initially deposit the funds into the wallet, which would, as a result, be locked - as neither the lender nor Valuete has access to the funds by themselves. Once the loan is closed ( i.e borrower has repaid the loan amount back ) then both parties ( lender and borrower ) can use their keys to sign and complete the transaction, and the borrower can receive their bitcoin back.

Valuete typically only intervenes when there is a dispute between and borrower and lender and charges a hefty fee on the erring party.

Advantages of Using 2-of-3 Multi-sig wallets

Asset-backed lending is not feasible without collateral that is more valuable than the loan amount, however handing over the complete ownership of Bitcoin to the lender whose value is more then loan creates huge incentive for the lender to sell of borrower’s bitcoin.

Multi-sig is a perfect solution for an asset-backed B2B lending scenario.

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Security

Why Multi-sig wallets provide the best security

Let’s take a look at a few examples to dive a little deeper:

Single Individual

Tom is a new bitcoiner and is using a single key bitcoin wallet. He’s in complete control of his bitcoin funds, but is unfortunately also the single point of failure. If Tom loses his wallet or forgets the password, he’s never getting his bitcoin back.

Single Entity

Tom decides he wants to use a popular crypto exchange and let’s them manage his bitcoin wallet. He’s no longer in direct control of his private key. If the exchange gets hacked or gets in trouble with regulators, Tom may never see his bitcoin again.

Multi-sig

Tom now decides to use a multi-sig bitcoin wallet. His bitcoin funds now receive an added layer of protection, as there’s no longer a single point of failure and any transaction requires approval from more than one private key. Tom is using the power of multi-sig and his bitcoin funds are receiving the maximum level of security.

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