Multisignature Accounts

Multisignature accounts are a powerful, natively-supported security and governance feature on Algorand that require multiple parties to approve transactions. Think of a multisignature account as a secure vault with multiple keyholes, where a predetermined number of keys must be used together to open it.

For example, a multisignature account might be configured so that any 2 out of 3 designated signers must approve before funds can be transferred. This creates a balance between security and operational flexibility that’s valuable in many scenarios:

Treasury management for organizations where multiple board members must approve expenditures
Shared accounts between business partners who want mutual consent for transactions
Enhanced security for high-value accounts by distributing signing authority across different devices or locations
Recovery options where backup signers can help regain access if a primary key is lost

What is a Multisignature Account?

Technically, a multisignature account on Algorand is a logical representation of an ordered set of addresses with a threshold and version. The threshold determines how many signatures are required to authorize any transaction from this account (such as 2-of-3 or 3-of-5), while the version specifies the multisignature protocol being used. multisignature accounts can perform the same operations as standard accounts, including sending transactions and participating in consensus. The address for a multisignature account is derived from the ordered list of participant accounts, the threshold, and version values.

Some important characteristics to understand:

The order of addresses matters when creating the multisignature account. Using addresses [A, B, C] creates a different multisignature address than [B, A, C].
However, the order of signatures does not matter when signing a transaction.
Multisignature accounts cannot nest other multisignature accounts. In other words, a multisignature account cannot include another multisignature account as one of its participant addresses.
You must send Algos to the multisignature address to initialize its state on the ledger, just like with any other account.

Benefits & Implications of Using Multisig Accounts

Benefits	Implications
Enhanced Security: Requires multiple signatures for transactions, adding an extra layer of protection against compromise of a single key	Added Complexity: Requires coordination among multiple signers for every transaction
Customizable Authorization: The number of required signatures can be adjusted at creation time to fit different security models (e.g., 2-of-3, 3-of-5, 5-of-5, etc.)	Key Management: All signers must securely manage their private keys to maintain the security of the multisig account
Distributed Key Storage: Signing keys can be stored separately and generated through different methods (kmd, standalone accounts, or a mix)	Transaction Size: Multisig transactions are larger than single-signature transactions, which could result in slightly higher transaction fees
Governance Mechanisms: Enables cryptographically secure governance structures where a subset of authorized users must approve actions	Not Always Necessary: For simple use cases where security and governance are not critical concerns, a single-signature account may be more practical
Integration with Smart Contracts: Can be paired with Algorand Smart Contracts for complex governance models requiring specific signature subsets	Cryptographic Best Practices Keys used as signers in critical multisig accounts should be used exclusively for this purpose.

How to Generate a Multisignature Account

There are different ways to generate a multisignature account. The examples below demonstrate how to create a multisignature account that requires 2 signatures from 3 possible signers to authorize transaction:

Source

  // Initialize an Algorand client instance and get funded accounts
  const { algorand, dispenser, randomAccountA, randomAccountB, randomAccountC } = await setupLocalnetEnvironment()

  // Create a 2-of-3 multisig account that requires
  // only 2 signatures from the 3 possible signers to authorize transactions
  const multisigAccountA = algorand.account.multisig(
    { version: 1, threshold: 2, addrs: [randomAccountA, randomAccountB, randomAccountC] },
    [randomAccountA.account, randomAccountB.account, randomAccountC.account],
  )

  // Fund the multisig account
  await algorand.account.ensureFunded(multisigAccountA, dispenser, (10).algo())

  // Send a payment transaction from the multisig account
  // which will automatically collect the required number of signatures
  // from the signing accounts provided when creating the multisig account
  await algorand.send.payment({
    sender: multisigAccountA,
    receiver: randomAccountA,
    amount: algo(1),
  })

Source

    env: LocalnetEnvironment = setup_localnet_environment()
    algorand_client = env.algorand_client
    dispenser = env.dispenser
    account_a = env.account_a
    account_b = env.account_b
    account_c = env.account_c

    """
    Create a 2-of-3 multisig account that requires
    only 2 signature from the 3 possible signers to authorize transactions
    """
    multisig_account = algorand_client.account.multisig(
        metadata=MultisigMetadata(
            version=1,
            threshold=2,
            addresses=[
                account_a.address,
                account_b.address,
                account_c.address,
            ],
        ),
        signing_accounts=[account_a, account_b, account_c],
    )

    algorand_client.account.ensure_funded(
        multisig_account.address, dispenser, AlgoAmount(algo=10)
    )

    """
    Send a payment transaction from the multisig account
    which will automatically collect the required number of signatures
    from the signing accounts provided when creating the multisig account
    """
    algorand_client.send.payment(
        PaymentParams(
            sender=multisig_account.address,
            receiver=account_a.address,
            amount=AlgoAmount(algo=1),
        ),
    )

$ ADDRESS1=$(goal account new | awk '{ print $6 }')
$ ADDRESS2=$(goal account new | awk '{ print $6 }')
$ ADDRESS3=$(goal account new | awk '{ print $6 }')

$ goal account multisig new $ADDRESS1 $ADDRESS2 $ADDRESS3 -T 2
Created new account with address [MULTISIG_ADDRESS]