A multi-signature wallet is based on multiple private keys. A single private key is not sufficient to send or sign a transaction. Multisig makes it possible to sign a document as a group and thus denationalize commerce.
Multisignature promises what seems to be as crucial in a decentralized financial system as decentralized money: decentralized contracts. In principle, multisig creates a Bitcoin address that pays out the available balance solely by signing multiple private keys. A kind of deposit account, therefore, with which costly and process-slowing middlemen are no longer needed. Multisig, therefore, offers a way to decentralize trading, because it usually takes two to three signatures to prevent one party from taking the other’s wallet hostage.
Satoshi Nakamoto also had thoughts on this, “You can write a transaction that requires two signatures to continue to be issued. You write a payment that requires the signature of both the receiver and the sender to be spent. To release escrow, you give the recipient your signed half, or the recipient returns the payment by giving you his signed half. In this simple case, no mediator is needed. The recourse is to refuse to ever release the trust, which would burn the money.”
Applied to international trade, one might cite the following example: Payment for logistical goods, such as air freight or ship loading, must be made or observed through costly middlemen. These intermediaries are necessary because where else do the client and the employee get the guarantee that the goods will be paid when they are already loaded or that they will be loaded at all when they have already been paid. Multisig offers a very simple solution to this problem. Thus, in the case of using a third party, a mediator, who also has to set a signature to release the wallet, the role of a centralized middleman is decentralized.
There are no limits to what Multisig can do: it can insure the centralized or decentralize entire organizational apparatuses, but at the same time Multisig does not undermine the individual’s ability to make decisions – it relies on collectivity when a collective decision is necessary.
