Questions about multi-sg

Every new market seems to be multi sig. I get that it is sort of like escrow. Is it a feature of bitcoin, or do the markets implement it, somehow? What is mean by the 2 of 2, 2 of 3? Is it safer for me as a buyer? Do ant major sites use it?


Comments


[1 Points] Myumpteenthaccount:

It's a feature of bitcoin. All multsig wallets will start with "3". It protects the buyer and the seller in that no market wallet exists so it's very difficult for the admins to run off with any significant hoard. Transactions are specific for each purchase and so you create a new wallet using your own private key every time.

2of2 means that once funds are deposited into a multisig wallet, buyer and seller must both sign off for the funds to be released. 3of3 means buyer, seller and a third party, admin of the market or escrow agent in our case, must all sign off for the funds to be released.

Someone else can fill in the details. This is what I gathered as a layman using TMP way back when that market was active.


[1 Points] hksupport:

A multisig address is part of Bitcoin. You send money to a multisig address just like you send money to a normal Bitcoin address. It just begins with a "3" instead of a "1".

A multisig address is a special Bitcoin address that can only have it's money be spent if more than one person agrees.

For example, let's say you create a "2-of-2" address using your Bitcoin key and a vendor's Bitcoin key. Any money sent to that address can then only be spent if both you and the vendor sign the transaction. You both have to agree to spend it. That's why it's called a "multisig" address - aka a "multiple signatures" address.

Or you can two a "2-of-3 address", with you, the vendor, and an escrow agent. Then any two of those three people can sign the transaction. So if the transaction goes smoothly, both the buyer and seller agree to send the money to the seller, and all is well. But if it doesn't go smoothly, they can appeal to the escrow agent who will then team with either the buyer or the vendor in order to send the money somewhere (either refund the buyer or pay the vendor).

The important thing to note there though is that no one person has access to the money. So for example, if a market was the escrow agent, you know the market can't exit scam with the money. And you also know the vendor can't just take the money and not ship. And the vendor knows that you have paid and can't get your money back and he also knows that the site can't steal it.

So there's no reason for him to require FE because he knows his money is safe. And that means for you the buyer, that you know he has incentive to finish the order, and make you happy, because he doesn't get paid until you or the market sign the transaction to pay him.

It protects everybody.

Only one site that I am aware of currently uses it, Mr. Lee's Greater Hong Kong. (The link to the market is the second line of that post, and the rest of the post talks about the market.)

I am a support guy for that site, but I am happy to answer any questions about multisig you might have, even if they are unrelated to the market. You can reply here or post in our sub.