Can You Share A Bitcoin Wallet?

Shared custody of a multisig vault.
Create a shared multisig wallet with Theya!

The first step toward financial autonomy is understanding Bitcoin; the second is taking self-custody of it. In the context of a bearer asset like Bitcoin, self-custody refers to the practice of personally holding the private keys to one's wallet rather than relying on a centralized service or third party. This involves writing down or memorizing a wallet’s seed phrase, a unique set of 12 words that grants you sole control over your Bitcoin by encapsulating all the information necessary to recover a wallet’s private key.

There are varying degrees of self-custody and multiple methods to achieve it. The aforementioned example pertains to singlesignature self-custody, where the user has a single private key associated with their wallet, and thus a single seed phrase they must keep secret and safe to maintain full control over their Bitcoin (read: Is A Seed Phrase The Same As A Private Key?). This method raises questions for many users, such as how to share custody of a Bitcoin wallet with a partner or how to mitigate the risk of losing the private key due to theft or loss. This is where multisignature (multisig) solutions come into play.

What Is A Shared Bitcoin Wallet?

When people talk about a shared Bitcoin wallet, they are technically referring to is a multisig wallet. Note, this does not mean sharing your 12-word seed phrase with others. In a multisig wallet, each person holds a separate seed phrase that is kept secret and safe. Seed phrases should never be shared, as doing so creates substantial security risks for your Bitcoin.

How Multisig Wallets Work

Multisig wallets require multiple private keys (each with a unique seed phrase) to authorize a transaction and access the Bitcoin, providing an added layer of security and flexibility. For instance, a multisignature wallet can be set up to require two out of three keys to sign a transaction. This differentiates from individual self-custody (singlesignature wallets) because more than one private key is involved.Multisig wallets allow for shared control among multiple parties while also offering protection against the loss or theft of a single private key, a vulnerability in singlesignature wallets. Multsig solutions are particularly useful for collaborative financial management, inheritance planning, or enhancing the security of significant Bitcoin holdings. 

Potential Parties to Share a Multisig Key With

  • Spouse or loved one
  • Family member
  • Trusted friend
  • Business partner
  • Financial advisor

For more information about multisignature wallets, click here.

How To Create A Multisig Wallet?

Creating a multisig wallet involves a few key steps. In a DIY scenario, this process includes generating multiple private keys and configuring your wallet software to recognize these keys. You would need to use compatible wallet software that supports multisig functionality. This setup process typically involves creating and securely storing separate seed phrases for each private key. While this method provides a higher degree of control and security, it also requires a solid understanding of wallet management and key security practices, making it more suitable for advanced users.

However, a collaborative custody multisig vault with a service like Theya simplifies this process significantly. Theya allows you to easily designate cosigners, such as a spouse or trusted friend, without the technical complexity of a DIY setup. With Theya, you can set up a two-of-three multisig wallet where one of the key holders can be Theya itself, providing additional security and recovery options. This approach ensures that even those with limited technical expertise can benefit from the enhanced security and shared control that multisig offers. You can learn more about our services here.