What is a signing device (or signer)?

A signing device or signer is a hardware or software tool used to approve or "sign" transactions. In a multi-key setup, multiple signatures are required to authorize a transaction, and each of these signatures is generated using a signing device.

Here’s a breakdown of key points regarding signers:

1. Purpose: Signers store the private keys needed to sign transactions securely. In a multi-key wallet, multiple keys are involved, and each signer holds one key.
   
   

2. Types of Signers:

   • Hardware Wallets: Physical devices like Trezor, Ledger, or Coldcard, which are considered highly secure because they store private keys offline, preventing exposure to online threats.
   • Software Wallets: Apps like Electrum that can also function as signing devices, although they are typically connected to the internet, which may present higher security risks.
   • Air-gapped Devices: Devices that are not connected to any network or internet, such as Coldcard wallets or even an old, offline smartphone. These provide enhanced security for storing private keys.

3. Role in Multi-key Wallets:

   • In a multi-key wallet, each signing device is responsible for holding one of the keys required to approve a transaction.
   • For example, in a 2-of-3 multi-key wallet, three signing devices each hold one private key, and at least two of these devices must sign a transaction for it to be valid.
   • This setup improves security and redundancy, as losing one device or key won’t necessarily result in losing access to the funds.
     
     

4. Workflow:

   • When initiating a transaction, the user needs to gather the required number of signatures (depending on the multi-key scheme, e.g., 2-of-3 or 3-of-5).
   • Each signer signs the transaction independently, without revealing its private key.
   • Once the transaction has the required number of signatures, it can be broadcast to the bitcoin network.
     
     

5. Security Benefits:

   • Multi-key setups with signing devices helps prevent a single point of failure, as multiple devices or keys are needed to approve a transaction.
   • It also adds protection against hacks or theft, as an attacker would need access to multiple signing devices to steal funds.

In summary, signers are crucial for securely managing private keys in multi-key wallets, adding a layer of security and flexibility in bitcoin holdings.