Coinfloor says it will pay out withdrawals using Multi-Signature Pay 2 Script Hash. What is Multi-Signature Pay 2 Script Hash? I read What is "Script Hash" address exactly and how does it work? but didn't understand how it enables more secure withdrawals form cold storage.
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Multi-signature is a feature to protect against theft.
Bitcoin includes a multi-signature feature that allows a transaction to require the signature of more than one private key to be spent. It is currently only usable for technical users but a greater availability for this feature can be expected in the future. Multi-signature can, for example, allow an organization to give access to its treasury to its members while only allowing a withdrawal if 3 of 5 members sign the transaction. It can also allow future online wallets to share a multi-signature address with their users, so that a thief would need to compromise both your computer and the online wallet servers in order to steal your funds.
Traditional Bitcoin addresses are secured with a single private key. P2SH addresses can associated with three private keys. Depositing funds into is the same as depositing funds into a standard Bitcoin address. However, withdrawing funds from the address requires at least 2 of the 3 keys to sign.
Arturo Herrero
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