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Securing Ethereum Wallet With Multisig

By Durga Prasad Moganty,

What Is Ethereum Wallet?

An Ethereum Wallet is a Cryptocurrency Wallet used on Ethereum Blockchain to store digital assets/tokens and to transfer assets/tokens from one wallet to the other.

Problem Statement

Today, we are seeing many DApps decentralised applications on Ethereum that use token as assets or Cryptocurrency for payments. However, I feel Ethereum Wallets are insecure when you lose the private key or someone hacks or multiple users are using the same wallet. For example, you partnered with someone in building a product and raised a funding of USD 1million or some Ether in Initial Coin Offerings (ICO). The fund could be misused by your partner without your knowledge or there is a risk of losing key or hacker can take all your funds in a single transaction, which is irreversible.

To avoid the above mentioned risks, one can build Multisig Wallets by using smart contracts in Ethereum.

How Multi Signature Wallet Works?

Multisig Wallet is a smart contract that is deployed on Ethereum network. A transaction can be done on Multisig Wallet like we do it on any other Ethereum address. A transaction requires multiple people confirmation before the funds can be transferred.

Multisig contracts implemented from Ethereum address

Executing a transaction using Multisig Wallets comprises of two step; submitting a transaction and confirming the transaction.

Submitting a transaction is like any other transaction from Ethereum address.

Confirming the transaction is like confirming the above transaction by multiple signatories.

There are many Multisig contracts implemented in the market of the likes of Gnosis, Parity, ConsenSys and from Ethereum owners.

Let’s discuss about Gnosis Multisig Wallets. You can use Gnosis UI at https://wallet.gnosis.io. Gnosis will connect to either test network or main network based on your MetaMask network.

Deploying Multisig Wallet

You can add wallet with the below information and deploy on Ethereum.

  • Name: Wallet name
  • Required Confirmations: Number of approvals needed by owners of Multisig Wallet
  • Daily Limit: Does not require confirmation. Setting it to zero for every transaction needs confirmation
  • Owners: Add the owner’s addresses who are authorized to sign

Deploying new Multisig Wallet on Ethereum network

Transferring Tokens from Multisig Wallet

You can either withdraw or deposit tokens on Multisig Wallet. In the Gnosis UI, you can configure the token details that you would like to transfer. Click on withdraw or deposit buttons in the UI and add the sender address and amount of tokens to be transferred. Owners (signatories) in the Wallet have to confirm before the transaction is executed.

Multisig Wallet transaction confirmation in Gnosis UI

Conclusion

A Multisig Wallet needs multiple signatures to transfer funds, which makes your Wallet more safe and secure. Multiple Multisig contracts are available in the market or if you are good at solidity, you can write your own Multisig contract. In either cases, you need to audit the contract carefully before deploying it on Mainnet.

About Innominds

Innominds is a leading Digital Transformation and Product Engineering company headquartered in San Jose, CA. It offers co-creation services to enterprises for building solutions utilising digital technologies focused on Devices, Apps, and Analytics. Innominds builds better outcomes securely for its clients through reliable advanced technologies like IoT, Blockchain, Big Data, Artificial Intelligence, DevOps and Enterprise Mobility among others. From idea to commercialisation, we strive to build convergent solutions that help our clients grow their business and realise their market vision.

To know more about our offerings, please write to marketing@innominds.com

Topics: Blockchain

Durga Prasad Moganty

Durga Prasad Moganty

Associate Director - Software Engineering

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