As the Christmas holidays began, two of the most prominent members of the XRP community, Dr.T and Tiffany Hayden, recently held a discussion on the advantages and cons of a multi-sig wallet on an exchange. The question was asked by a cryptocurrency and blockchain space enthusiast.
Here, Dr.T responded by stating that the multi-sig feature enables high security of funds against hackers. However, to legitimize the use of such wallets, it requires a third party to participate. In his words:
“Multi-sig makes signing transactions harder as you have others who must agree to move funds. It means, stealing/hacking is MUCH harder too. Cons: legit use requires another party too.”
Here, Tiffany Hayden raised a few valuable questions to keep in check the implementation of multi-sig. Through her questions, she implied that there must be a paper describing who holds the keys and clarity on what the multi-sig contract is programmed to do. She also wrote:
“Under what conditions the different parties will sign a txn, and how I can remove my money anytime I want w/o permission?”
She continued to state that absense of information is scary. Moreover, it is even scarier to notice people’s ignorance on the matter and their unwillingness to address such issues.
Dr.T put up another tweet on the matter and opined that there can be a use case for a multi-sig wallet for a custodian. Here, he commented:
“The nefarious use-case would be: A custodian keeping fractional reserves of the money they borrowed from customers and making sure they don’t face a “bank-run” type of scenario (all customers withdrawing cash from ATM at the same time). They can then “safely” lend speculate XRP.”
On the market front, XRP is currently traveling in the red zone, slumped by just 0.33%. At the time of writing, the token was trading at a price of $0.37 with a market cap of $15.3 billion.