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 (Address A, B, C creates a different multisignature address than B, A, C)
However, the order of signatures doesn’t matter when signing a transaction
Multisignature accounts cannot nest other multisignature accounts
You must send Algos to the multisignature address to initialize its state on the blockchain, just like with any other account

Benefits & Implications of Using Multisig Accounts

When to Use	When Not to Use
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 to fit different security models (e.g., 2-of-3, 3-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, resulting 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

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:

  // 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),
  })

    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]