The Mystery of Multi-Signature Transactions: What Happens When No One Signs in Ethereum?
Ethereum’s multi-sig transaction feature allows users to secure their cryptocurrency transactions with multiple signatures, making it harder for hackers to steal funds. However, this security measure also raises a crucial question: what happens to the coins when they are sent from the sender’s account? In this article, we will dive into the world of Ethereum multi-sig transactions and explore whether the coins are returned to the sender or remain lost forever.
What is a multi-signature transaction?
A multi-sig transaction is a type of transaction that requires multiple signatures from at least three different parties (or “signers”) before it can be verified as valid. These signers create a new wallet address together and once they agree on the transaction amount and details, the transaction is broadcast to the Ethereum network.
How do multi-sig transactions work in Ethereum?
In Ethereum, transactions are carried out using a process called “blockchain verification.” When a sender wants to send funds to a recipient, they create a new transaction and add it to their wallet. The sender’s wallet contains a list of accounts that can sign the transaction.
To sign a multi-sig transaction, at least three parties must agree to the signature request using their own private keys. Once these signatures are collected from all participants (signatories), they are sent to the Ethereum network and verified by nodes via the public key pinning mechanism.
What happens if no one signs a multi-sig transaction?
In theory, once the transaction is sent to the network and verified, it would be valid as long as three parties agree to the signature. However, this leaves us with an important question: what happens to the coins once they are sent from the sender’s account?
The answer lies in Ethereum’s “proof-of-work” consensus algorithm, which requires nodes to verify transactions through complex mathematical calculations (known as “miners”). If three parties fail to sign a multi-sig transaction, miners can do the following:
- Block the transaction: If they find it impossible to reach an agreement due to insufficient signatures, they can block and reject the transaction.
- Add the transaction to the blockchain: They add the transaction to the Ethereum blockchain as is, without any further processing.
In this case, the coins would remain in limbo on the Ethereum network. The sender’s wallet would still contain the signed transaction, but the recipient’s wallet (or account) would not have received the funds yet.
Are the coins returned to the sender?
The good news is that there are mechanisms in place to ensure that the coins are returned to the sender if they are lost or stolen due to a failed multi-sig transaction. These measures include:
- Chain ID: Ethereum’s blockchain uses a unique identifier called a “chain ID” for each transaction. If three parties cannot agree on the signature, the chain ID is changed to prevent the transaction from being added to the blockchain.
- Node Restart: In extreme cases, nodes can be rebooted and restarted with new keys to ensure that new signatures are captured and the transaction can be added to the blockchain again.
Conclusion
In summary, while Ethereum’s multi-sig transaction feature provides an impressive level of security for cryptocurrency transactions, it also introduces a potential vulnerability. If three parties in a multi-sig transaction cannot agree on the signature, the coins will be lost forever on the Ethereum network.
To mitigate this risk, developers and users can explore alternative solutions, such as:
1.