I wanted to buy some stuff from cryptomarket and because keeping money in the market wallet isn't safe - I want to give multisig transaction a try. But I weren't fully able to get my head around it, though I'm a full stack coder and been in the crypto since 2012. I came to various tutorials but none fully answer my question.
I'll divide this tutorial in 4 steps:
Definition
So what's a multisig transaction?It's a transaction (wallet) which requires mparticipants ofn (where m<=n) to sign it with their private keys to release the funds to another address. It's like some safe deposit that ensures that buyer pays for the goods and the vendor will ship it.
M of N
There can be many participants, so it can be 2of2, 2of3 3of4...The most common is 2of3. So it means the transactions has 3 participants: seller(vendor), buyer and the mediator; 2 signature are required to release the funds to another address. When everything goes well, vendor ships the goods (sings) you receive it (sign) and the funds are released. But in case something goes wrong (stuff won't arrive, bad quality...) it comes handy to have the mediator to resolve the dispute. Some cryptomarkets have buy with multisig option (button) where the mediator (market) is automatically "verified". But you can easily find reliable mediators at https://www.bitrated.com You can also do the transaction there (start trade - green button)
Create vs join
There are 2 ways to "step into" multisig transaction 1st) you initiate (generate) the multisig wallet (putting the Xpubs of others participants into the wallet, or 2nd) somebody else do it, you just "join" it.1st: Creating a multisig wallet you need to know Xpubs of other participants. Then you usualy paste Xpubs of every participant in some form ( and some other option like default "release" address...) and then the multisig address is generated. And you can send your coins to that address. Easy way to understand and perform multisig is coinb or a "full blown version". Here's coinb example - you'll paste Xpubs into the fields of this form
Once the agreement between all parties has completed a transaction can be created. Once transaction is signed you can then broadcast into the network( broadcast button in the panel) releasing the funds to the choosen address. That's to it - no big science :D 2nd: When you "join" the multisig wallet, you've to verify that the vendor didn't put there 2 Xpubs - you've to contact the mediator and ask him if the key XY is his.
Multisig may at first seem bit confusing, but using services like bitrated you'll work it out easily and that's the advised way
Things to look for: Always double check the "integrity" of Xpubs of other participants - you've contact them and select carefuly. Services like bitrated or reputation system at Open bazar will help you to choose reliable mediators.Some Technical terms:
Xpub - public key of the "original" wallet of the multisig participant (each one has its corresponding private key to sign the transaction when needed).
2of3 - 2 signatures (participants) of the 3 "available" needed to release the funds to another address