Step-by-step guide

Litecoin multisig tutorial:
set up a 2-of-3 vault

Multisig means no single key can move your coins. This guide walks through every step — from choosing your quorum to broadcasting your first transaction — using LiteSig's browser-based vault. No terminal. No wallet files. No single point of failure.

Try it free on testnet → Read the guide

What is multisig, and why does it matter for Litecoin?

A standard Litecoin wallet has one private key. Lose it, and your coins are gone. Get it stolen, and your coins are gone. A single hardware wallet failure, a house fire, a wrench attack — one event wipes everything.

Multisig (multi-signature) changes this. Instead of one key, a multisig vault has N keys, and M of them must sign before any transaction is valid. An attacker who steals one key gets nothing. A cosigner who loses their device costs you nothing.

Core concept

M-of-N explained

N is the total number of keys in the vault. M is how many are required to approve a spend. The most common setup is 2-of-3: any two of three keyholders must sign. You can lose or have one key compromised and still access your funds.

Common quorums and when to use each

QuorumKeys needed to spendBest for
2-of-3 recommended Any 2 of 3 Individuals, family vaults, small teams. Survives one lost or compromised key.
2-of-2 Both keys Joint accounts where both parties must agree. No tolerance for lost keys.
3-of-5 Any 3 of 5 Business treasuries with multiple officers. High redundancy.
1-of-2 Either key Backup convenience (either location can spend). No protection from key theft.
Testnet first. LiteSig lets you build a full multisig vault on Litecoin testnet — real coordination, real PSBT signing, zero real funds at stake. Try the whole flow before committing mainnet LTC.

Step-by-step: creating a 2-of-3 multisig vault

This guide uses a 2-of-3 setup with three participants: you, and two cosigners (Alice and Bob). Adjust the numbers for your own quorum.

1
Everyone creates a LiteSig account

All three participants — you, Alice, and Bob — sign up at app.litesig.com. The free plan is enough. No card required.

Each person uses their own device and their own account. This is the whole point: keys are generated independently in each browser, never shared with the server, and never combined until a transaction is being signed.

2
Each cosigner generates their key

In LiteSig, go to Create wallet → Multisig vault. Choose your network (testnet to practice, mainnet for real funds) and set m = 2, n = 3.

LiteSig generates a 12-word BIP39 seed phrase for you in the browser. Write it down on paper and keep it safe. This is your master recovery key — we never see it, store it, or transmit it.

Do not skip the backup step. If you lose your seed phrase and your device, your key is gone forever. No support ticket can recover it. Paper backup, stored somewhere safe, is non-negotiable.

Alice and Bob each do the same on their own devices. Three independent seeds, three independent keys.

3
Each cosigner copies their account xpub

After generating their key, LiteSig shows each person their account xpub — an extended public key that starts with Ltub… (mainnet) or ttub… (testnet).

This is safe to share. An xpub reveals public keys — it cannot be used to sign transactions or derive private keys. Share it like you'd share an email address.

Alice and Bob each send you their xpub. Out of band is fine — Signal, email, even a phone call where they read it out. You'll paste all three into the vault setup in the next step.
4
Create the vault with all three xpubs

You (the vault creator) continue through LiteSig's wallet setup. On the Cosigners step, paste Alice's and Bob's xpubs into the two fields below your own.

LiteSig validates each xpub and derives the multisig address using BIP67 key sorting — the same deterministic method used by every standards-compliant wallet. All three of you will see the same vault address if you enter the same xpubs in the same order.

Set a strong encryption passphrase (10+ characters, not your account password). This encrypts your key locally — it's never sent to the server.

Hit Create wallet. The vault is now active.

5
Alice and Bob add the vault to their accounts

Alice and Bob each go through the same Create wallet flow on their devices, using the same settings (2-of-3, same network, same script type) and entering all three xpubs — including yours.

Because all three vaults are derived from the same set of xpubs using the same algorithm, they all resolve to the same Litecoin address. You now each have your own copy of the vault in your browser, secured by your own passphrase and seed phrase.

Sanity check: all three of you should see the same first receive address in the Review step. If they differ, check that the xpubs and script type (P2WSH recommended) match exactly.
6
Fund the vault

In LiteSig, open your vault and tap Receive. You'll see the vault's Litecoin address and a QR code. Send LTC to this address from any wallet or exchange.

On testnet, you can get free test LTC from a faucet (LiteSig shows the link). On mainnet, transfer from wherever your LTC lives now.

Once the transaction confirms, the balance appears in the vault. Those funds cannot move without 2-of-3 signatures.

7
Propose a transaction (spend)

When you want to send from the vault, open it in LiteSig and tap Send. Enter the destination address and amount.

LiteSig builds a PSBT (Partially Signed Bitcoin Transaction) — a standard format that packages the transaction details ready for cosigners to review and sign. Your key signs it first. The PSBT is stored on LiteSig's server so cosigners can fetch it without you having to email files around.

If you registered Alice's and Bob's email addresses when setting up the vault, they'll receive an email notification at this point.

8
Cosigners review and sign

Alice opens LiteSig, goes to her copy of the vault, and sees the pending transaction. She enters her passphrase, reviews the destination and amount, and signs. Bob does the same.

LiteSig tracks who has signed. Once 2 of 3 signatures are collected, the transaction is finalized automatically.

You control the threshold. With 2-of-3, only two cosigners need to act — the third can be unavailable, travelling, or simply used as a cold backup. No coordination phone call needed; LiteSig handles the signature round asynchronously.
9
Broadcast

Once the required signatures are in place, LiteSig shows a Broadcast button. Tap it and the fully-signed transaction is sent to the Litecoin network directly from your browser. LiteSig's server is not in the broadcast path.

The transaction confirms in the next block, typically within 2–5 minutes. The vault balance updates automatically.

That's it. You just completed a 2-of-3 multisig spend. No terminal, no wallet files, no emailed PSBT attachments.

What LiteSig does and doesn't do

✓ Key generation in your browser

Seed phrases and private keys are generated in your browser via the Web Crypto API. They are encrypted with your passphrase before anything reaches the server.

✓ PSBT coordination

LiteSig stores the PSBT between signing rounds so cosigners don't need to exchange files. The server sees the opaque base64 PSBT but cannot sign or modify it.

✓ BIP39 / BIP48 / BIP67 standards

Your vault uses open standards throughout. If LiteSig disappears, recover your vault in any standards-compliant wallet using your seed phrase and xpubs.

✗ LiteSig cannot move your funds

We don't hold a key, we don't know your passphrase, and the server never sees a private key. We physically cannot sign on your behalf. Full architecture →

Ready to try it? Start on testnet — free

Build a full 2-of-3 multisig vault on Litecoin testnet. Real coordination, real PSBT signing, zero real funds. No card, no tricks.

Create a free account → Calculate your quorum

When you're ready for mainnet, a Hobbyist plan is $9/month — or $79/year.

Frequently asked questions

Can I recover my vault if I lose my seed phrase?

No — and this is by design. Your seed phrase is the root of your private key. LiteSig never stores it, so we can't recover it for you. Write it down on paper (not in a notes app), store it somewhere fireproof and separate from your devices. If you lose your seed but still have your passphrase and account access, you can export the encrypted blob, but without the seed you cannot sign transactions from that key. Your vault is still accessible as long as two other cosigners have their seeds.

What happens if one cosigner is permanently unavailable?

With a 2-of-3 vault, losing one cosigner entirely still leaves you with two — enough to spend. This is the primary advantage over 2-of-2, where losing one cosigner locks the vault permanently. With 3-of-5 you can lose two. Always choose a quorum where losing the least reliable participant still leaves you above the threshold.

What is a PSBT and why does multisig use it?

PSBT stands for Partially Signed Bitcoin Transaction (BIP-174, used identically by Litecoin). It's a standardised format for a transaction that isn't fully signed yet — each cosigner adds their signature, and the PSBT is combined once enough are collected. Before PSBTs, multisig required passing raw hex transaction files around and merging them manually. LiteSig handles PSBT creation, routing, and combination so you never see the underlying format.

Can I use a hardware wallet as one of the cosigners?

Yes, if your hardware wallet supports Litecoin multisig and BIP48 derivation. Ledger and Trezor both support this through their companion apps, though the setup is more involved (you'll derive the xpub from the device and paste it into LiteSig). For signing rounds, the hardware wallet would sign the PSBT file downloaded from LiteSig, then you'd re-upload the partially signed PSBT. Future LiteSig versions may integrate hardware wallets directly.

What is P2WSH and should I use it?

P2WSH (Pay-to-Witness-Script-Hash) is native SegWit multisig and the recommended script type. It produces addresses starting with ltc1… and has the lowest transaction fees. P2SH-P2WSH is nested SegWit (addresses start with M…) — use it only if you need compatibility with wallets that don't support native SegWit. Legacy P2SH is the most compatible but most expensive to spend from. When in doubt, pick P2WSH.

What happens to my vault if LiteSig shuts down?

Your funds remain yours. Because LiteSig uses BIP39/BIP48/PSBT open standards, you can reconstruct the vault in any compatible wallet (such as Electrum-LTC with the correct derivation path) using your seed phrase. The subscription pays for the coordination service; the vault itself is not LiteSig-specific. We also recommend exporting your vault configuration from LiteSig periodically as a backup.

Further reading

Go deeper on specific aspects of Litecoin multisig: