Bitcoin and Ethereum Wallet Security: Multisig vs Threshold Signatures

When it comes to securing large sums of cryptocurrency, two popular models dominate the scene: multisig and threshold signatures. While they may look similar on the surface, they have distinct differences in their security models, fees, and operational requirements.

Multisig, which enforces quorum on-chain via script or contract, is provable and visible to auditors. However, it can be cumbersome and expensive for high-threshold setups, with larger on-chain footprints and gas costs on Ethereum and other EVM chains.

Threshold signatures (TSS), on the other hand, split a private key into shares and coordinate an off-chain signing protocol. This approach produces one aggregated signature that looks like it comes from a single key, making it cleaner and more efficient in terms of fees and footprint. However, TSS requires robust logs, signer attestations, and monitoring to ensure its security.

Despite their differences, both models share the goal of preventing a single compromised signer from moving funds. The real challenge lies in operational discipline and process, as highlighted by a recent incident on THORChain where an attacker exploited a GG20-based TSS protocol by deliberately failing signing rounds.