Storing Bitcoin securely requires special care, as it is about protecting your valuable assets. 2 of 3 Multi-signature wallet Using different hardware wallets is considered one of the safest ways to protect your Bitcoin from loss or theft. This configuration provides a robust security structure, requiring at least two of the three hardware wallets to confirm transactions. In this blog post, we'll show you step by step how to Multi Signature with Sparrow and thus maximize the security of your Bitcoin.
Why use a multi-signature wallet?
The use of a Multi Signature Wallet This ensures that multiple private keys are required for each transaction. Instead of relying on a single hardware wallet, as is the case with most wallet setups, you rely on the security of multiple wallets. This means that even if one wallet is lost or stolen, you will still have access to your Bitcoin. In this example, we will set up a "2 of 3" setup, which requires two of three hardware wallets to sign a transaction.
What do you need for multi-signature with Sparrow Wallet?
- Sparrow Wallet (for free downloadable)
- Three hardware wallets (e.g. BitBox, Blockstream Jade, Specter DIY)
- USB cable or QR code scanner (depending on the hardware wallet)
Step 1: Create a Multi Signature Sparrow Wallet
1. Create new wallet:
Start the Sparrow Wallet Software and click on “File” in the top left corner and then on “New Wallet” to create a new wallet.
2. Name wallet:
Give your wallet a name, e.g. “Multi Signature Wallet”, and click “Create Wallet”.
3. Enable multi-signature:
By default, the wallet is set to “Single Signature.” Change the Policy Type on Multi Signaturto enable the multi-signature setup.
4. Select script type:
Select “Native Segwit” as the script type, as this is one of the newest and most efficient formats available with the Multi Signature Sparrow Wallet-Configuration works (usually preset).
Step 2: Configure multi-signature with Sparrow Wallet
Now you configure the multi-signature setup:
- Select 2 of 3 setups:
A "2 of 3" setup means you need two of the three hardware wallets for each transaction. This configuration is ideal because it offers a balanced mix of security and accessibility. Other setups, such as "3 of 4" or "2 of 2," are also possible, but "2 of 3" is something of a gold standard.
2. Add keystores:
Now we'll add the three hardware wallets (BitBox, Blockstream Jade, and Specter DIY) as keystores. Connect each wallet to your computer, either via USB or QR code (depending on the device).
Status quo in my example:
In my example, I've already created a seed phrase for the BitBox and the Jade, which is already stored on the devices. I'll create a new seed phrase for the Specter DIY.
Step 3: Integrate BitBox into the Multi Signature Wallet
- Connecting BitBox:
Close your BitBox Hardware Wallet to the computer via the USB cable. - Enter password: If your BitBox is protected with a password, enter it to unlock the wallet. Using a passphrase is also possible, but not recommended, as it makes the wallet unnecessarily complex.
- Sparrow Wallet recognizes the BitBox:
In Sparrow Wallet, click on “Connected Hardware Wallet” and then on “Scan” so that the program recognizes your BitBox. - Import keystore:
Sparrow Wallet recognizes the X-Pub key (public key) of the BitBox automatically. Click on “Import Keystore” to import the information into the Multi Signature Sparrow Wallet to transfer.
Step 4: Integrate Jade
select the next keystore then:
- Connect Blockstream Jade:
Connect the Blockstream Jade Wallet to your computer via USB and turn it on. - Enter PIN:
Enter your Jade Wallet PIN to unlock it. - Establish connection:
In the Sparrow Wallet, select “Connected Hardware Wallet” again and then “Scan.” You can also Air-Gapped-mode and the QR code scan if you want to use the wallet offline, but this is very fiddly because of the tiny screen. - Import keystore:
Just like with the BitBox, the X-Pub key is recognized and imported using “Import Keystore” so that the Jade Wallet is integrated into the multi-signature Sparrow Wallet.
Step 5: Integrate Specter DIY into Multi Signature with Sparrow Wallet
select the next keystore then:
- Preparing Specter DIY:
Start the Specter DIY and enter the PIN code, if set. - Create seed phrase:
If you haven’t already, create a new seed phrase and write it down or import an existing one. You can enter this manually or scan the QR code. Important: Copy the seed phrase. - Import keystore:
Link the Specter DIY via QR code, go to Specter DIY and “Master public keys” and then on “Multisig”Then we import the X-Pub by clicking on “Airgapped Hardware Wallet”, then go to Specter DIY "Scan" and scan the X-Pub.
Step 6: Save the multi-signature configuration with Sparrow Wallet
- Check settings:
Make sure that all three hardware wallets are correctly registered in the Multi signature wallet in the Sparrow Wallet were added. - Set password:
You can set a password for the Sparrow Wallet, which protects access to your wallet data if someone gains access to your computer. This is only relevant for privacy, not security. If someone were to log in, they could see how many Bitcoin you have. - Save descriptor:
The Descriptor is crucial for your multi-signature wallet. It contains information about all X-Pub keys used. Save this descriptor absolutelyPrint it out and attach it to each piece of the multi-signature wallet. If you lose a seed phrase, you'll also need it to restore the wallet. - Tip: Save it in a password manager. This ensures you always have access to the multi-signature configuration.
Step 7: Manage seed phrases and backups of the multi-signature wallet
- Save seed phrases:
Each hardware wallet has its own seed phrase. These should be secured in a robust manner, e.g. stamped in steelto protect them from physical harm. - Store backups in different locations:
Make sure you secure your seed phrases and descriptor in different locations. Use security envelopes or QR code stickers to protect the information and ensure it can't be viewed unnoticed.
Step 8: Perform transactions: Multi Signature with Sparrow Wallet
After completing the setup, you can now make transactions. To do so, you will need at least two of the three hardware wallets to sign a transaction. This makes Multi Signature Sparrow Wallet extremely safe and at the same time flexible.
Conclusion: Multi Signature with Sparrow Wallet – Maximum security for your Bitcoin
The Multi Signature Sparrow Wallet offers one of the most secure ways to protect your Bitcoin assets. With a "2 out of 3" setup that uses three hardware wallets, you ensure that even the loss of one wallet won't mean you lose full access to your Bitcoins. The combination of multiple wallets and the easy setup with the Sparrow Wallet significantly increases your security.
By keeping the seed phrases safe and securing the descriptor, you can rest assured that your assets are secure in the long term.
