*Please note this is for advanced users only.
*When you have set up a multisig wallet, always test small in and out transactions to make sure the coordination file and private keys are working accordingly.
This is a another free and great multisig platform to use, but is a bit technical - thus reserved for the Bitcoin user who knows what he is doing. It is a desktop application which is run locally on a laptop or PC. The wallet allows for users to sign with their keys remotely, meaning that the participants of the multisig do not have to be in the same geographical location or using the same computer when signing a transaction. Sparrow supports most hardware wallets, including the older Ledger Nano S, which is the most popular and affordable hardware wallet available. Sparrow also supports the more secure PSBT (Partially signed Bitcoin transaction) enabled hardware wallets, such as the ColdCard or Cobovault.
How to video
This is the most user friendly free multisig wallet. However, it only supports hardware wallets that make use of PSBT (Partially signed Bitcoin transaction)s (partially signed Bitcoin transaction). This means that older hardware wallets such as the Ledger Nano S and Trezor One/Model T are not supported. Make use of ColdCard, Cobovault or any other PSBT enabled hardware wallet for setting up this multisig wallet. Blue Wallet can be downloaded as a desktop app for Mac only currently, or run on iOS or Android mobile devices.
Caravan is built by Unchained Capital and is free to use. Unlike the other multisig applications, Caravan exists as a website, rather than an application which runs locally on your device or PC. It is very easy to use and can connect to most hardware wallets, including the Ledger Nano S.
Step by Step Guide (Sparrow)
This is the most common setup for an individual who is looking to secure a medium to
large amount of value (>R100k). The simplest way to do it is the following:
Video Guide using Sparrow Wallet
- Purchase 3x Ledger Nano S and have them shipped to you/your client if you are assisting a client with this set up.
- Set up each of the 3 hardware wallets, following this guide. Be sure to write down the private key (24 words) of each hardware wallet and store them safely, in a different location to the devices.
- Download and install Sparrow Wallet on your/your client’s PC.
- Follow the setup guide on the Sparrow Website.
- Steps for creating a 2 of 3 multisig wallet in Sparrow:
(Sparrow app Steps)
- Click File/new wallet
- Select Settings on the left side tab
- Select the drop-down menu Policy Type: choose Multi signature
- Cosigners bar: select 2 and 3 (M of N should state: 2/3)
- Script Type: Leave as default (Native Segwit (P2WSH))
- Script Policy: Leave as default
- Keystores: These are a list of the keys (hardware devices) that you will be using to create the multi signature wallet. For Ledger Nano S, select the option Connected Hardware Wallet.
- Connect your hardware wallet and click Scan.
- Your wallet should show up (Ledger Nano S) with a drop-down menu next to it. Click Import Keystore.
- Change the label on Keystore 1 to something that makes sense to you, Eg. Hardware Wallet 001 (Ledger Nano S).
- Repeat for Keystores 2 and 3.
Exporting the Wallet Config file: The last step is to export your Wallet config file. This is an essential file and should be saved on a flash drive and kept with your hardware wallet(s). You will use this file if you need to access your funds on Sparrow wallet that had to be reinstalled on a new PC. Eg. Your PC got stolen and you need to restore your wallet.
This file can then be imported into Sparrow to reload all the information relating to the keystores and multisig. Click File/export wallet. Save this file. You can also use this file if you are signing the multisig transaction on different devices and need to coordinate signing. Eg. You and your wife need to both sign using your hardware devices to move funds out of the multisig, but are in geographically separate locations and can’t use the same PC. Thus you both download and run Sparrow wallet and import the config file to ensure you are both working from the same multisig wallet, then proceed with the signing process with the different keys.
Signing the transaction/s on different machines: This is the final part of sending a transaction, when 2 of the 3 keys must sign the transaction in order to broadcast it across the Bitcoin network (pay somebody). The first key initiates the transaction and signs it by connecting the hardware wallet and following the prompts. When complete, the PSBT (Partially signed Bitcoin transaction) file must be exported and sent to the 2nd signing party.
This file is imported into Sparrow (after opening the correct multisig wallet using the earlier mentioned Wallet config file). This will trigger the request for a second key to sign, connect the next hardware wallet and sign the transaction. Once complete, broadcast the transaction to the network.