What is multisig custody, and how does Fedi use it?

Multisig, short for multi-signature, is a method of securing bitcoin by requiring multiple private keys to authorize transactions instead of just one. Consequently, this custody model is very secure and is used by exchanges to mitigate the risks of hacking and theft.

Fedi utilizes the Fedimint protocol to leverage multisig by federating custody across multiple fedimint servers run by independent guardians of a federation, resulting in the following advantages:

• The bitcoin held in the federation is never subject to the control of a single individual, making it difficult for a malicious guardian to steal funds.
• Redundancy is established, allowing one or more servers to go offline without impacting the processing of transactions so long as the consensus threshold is not breached.