Multispend vs Multisig: What’s the Difference?

Multispend is a Fedi feature that allows you to spend funds as a group. Here's how it works: you first create a chat group within Fedi focused on community spending decisions, then set up a multispend wallet through which select members vote on whether to disburse requested funds.

Because the word “multispend” is similar to “multisig," people sometimes confuse them.

Plus, both involve a group and an approval threshold for moving funds around (e.g. two out of three signers). However, a multispend wallet and a multisig vault serve different purposes:  

• Multisig vaults distribute control over bitcoin on the base chain across multiple keys 

• Multispend wallets give a group a way to decide together how shared funds are withdrawn

In this article, we explain how each works and why knowing the difference matters.

What is a multisig vault?

Multisig, short for “multisignature”, is a Bitcoin mechanism that requires multiple private keys to authorise a transaction.

With a standard single-signature wallet, one private key is enough to move the bitcoin it controls. A multisig wallet instead has several keys and a threshold specifying how many must sign for a transaction to happen.

For example, a 2-of-3 multisig has three keys. Any two are required to authorise a transaction.

The keys might all belong to one person and be stored on different devices, or they might be distributed in different locations and among different people or organisations.

Multisig is useful when you do not want control of bitcoin to depend on a single key. It is also used in collaborative custody arrangements, as we explain in our overview of different approaches to Bitcoin custody.

Multisig also plays an important role in Fedimint.

A Fedimint Federation is run by a group of Guardians. Collectively, those Guardians control the bitcoin the Federation holds using a multisig vault. No individual Guardian has enough authority to move those funds alone. This distributed responsibility is central to Fedimint’s approach to community custody.

What is Multispend?

Multispend is a feature in Fedi for groups that want to manage a shared pool of funds.

When creating a Multispend, the group chooses who gets to vote and how many votes are required to approve a withdrawal.

Suppose five members of a savings group create a Multispend group with a 3-of-5 threshold. When one member submits a request to withdraw funds, at least three voters must approve the request before funds can be spent.

The group does not need to coordinate private keys or construct bitcoin transactions. Members interact through Fedi, where they can contribute funds, see the group’s transaction history, submit withdrawal requests and vote on them.

Our guide to using Multispend walks through the process from creating a Multispend to making and approving a withdrawal.

Multisig vs Multispend

A key difference between multisig and Multispend is the different types of threshold control.

With multisig vaults, the threshold refers to signatures, while with Multispend wallets, it refers to votes. This also means the people involved have different responsibilities.

A multisig vault key holder is responsible for protecting and using a private key. Depending on the arrangement, that involves considerations such as secure storage, backups, signing and recovery.

A Multispend voter has a different job. They decide whether money should leave the group’s shared fund.

How do they fit together in Fedi?

With Fedi, multisig vaults are a prerequisite to Multispend wallets.

At the Fedimint Federation level, Guardians collectively secure the bitcoin the Federation holds via a multisig. At the same time, with Multispend, members decide how their group, which exists within the Federation, spends funds.

Members of a Multispend group do not need to be Guardians, and Guardians do not decide how the Multispend group uses its money.

That separation is what makes Multispend useful for everyday group money management. A family, savings group, organisation or group of friends can establish rules for shared funds without each member taking on the responsibilities of managing a multisig setup.

The difference between a multisig vault and a Multispend wallet is simple: Multisig secures bitcoin at the base layer, while Multispend lets people make shared spending decisions within a Federation. 

In Fedi, the two work together. Guardians use multisig to collectively secure the bitcoin the Federation holds. Multispend builds on this foundation, letting a group create a shared fund and decide together when money should leave it. 

This means members can contribute to a shared fund, request withdrawals and vote on how the money is spent, without each member needing to manage private keys or participate in the underlying multisig setup.

So, multisig answers “Who must sign to move the bitcoin securing the Federation?”, while Multispend answers “Who must approve spending from this group’s shared fund?”.