Originally published on Unchained.com.

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Once someone decides that they want to hold bitcoin in self-custody, they will soon discover that hardware wallets are the most secure tools for managing bitcoin keys. The next question becomes whether to use a singlesig wallet or a multisig wallet.

If you choose to use multisig to secure your long-term savings, you will also need to decide whether you want to set it up all by yourself, or in collaboration with others. Both of these approaches have their own set of trade-offs, and in this article we will compare and contrast them.

Do-it-yourself (DIY) multisig

An attractive characteristic of bitcoin is that it allows people to become more self-sovereign with their wealth. If you’re someone who emphasizes the importance of this feature, your initial reaction to collaborative custody multisig may be one of skepticism. You might instead be considering setting up multisig by yourself, without involving anyone else in your arrangement.

The most common DIY multisig setup involves using multiple keys from hardware wallets you control

A multisig wallet can be set up by using one of several free and open source wallet softwares, such as Caravan, Sparrow Wallet, or Electrum. They allow you to combine extended public keys (xpubs) to build the multisig quorum you want. This approach has a couple of advantages—it gives you the opportunity to customize the structure to suit your needs and potentially retain more privacy than collaborative multisig.

Collaborative custody multisig

Although “collaborative custody” may seem like an alternative to self-custody, these labels are not mutually exclusive. In a thoughtfully designed multisig structure, both terms can accurately describe the same situation.

Bitcoin self-custody is typically defined by who possesses the power to spend the bitcoin. If you hold bitcoin in self-custody, then you’re the only one with unilateral power to spend your bitcoin. Collaborative custody means you’re collaborating with another party to help you manage or spend the bitcoin. In a 2-of-3 multisig where you hold two keys and a collaborative partner holds one key, both features are available! You can still move your bitcoin without relying on the collaborative partner, but you can also receive assistance from them when needed. Additionally, your collaborative partner…

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