Setting Up a Multi‐Signature Wallet with Ledger Live - aidanonycz/Ledger-Article-Guides-09 GitHub Wiki

Ledger Live does not natively support the creation or management of multi-signature (multisig) wallets directly within its interface. A multisig wallet requires multiple private keys to authorize a transaction, enhancing security by distributing control among several parties or devices. 

While Ledger hardware wallets (Nano S Plus, Nano X, Flex, or Stax) can participate in multisig setups due to their ability to securely store and sign with private keys, Ledger Live itself lacks built-in tools to configure or operate such wallets for most cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH). To set up a multisig wallet with your Ledger, you’ll need to use third-party software compatible with Ledger devices, such as Sparrow Wallet, Electrum, or Unchained Capital’s platform, alongside Ledger Live for initial setup and asset management. 

Please download the last update of Ledger Live Application:

1.Ledger Live for Windows 10/11

2.Ledger Live for MAC

3.Ledger Live for Android

Below is a step-by-step guide to setting up a multisig wallet using your Ledger with these external tools, focusing on Bitcoin as the primary example, since it’s the most commonly supported coin for multisig with Ledger.

What You’ll Need

  • A Ledger hardware wallet (initialized with a recovery phrase and PIN).
  • Ledger Live installed and updated (e.g., version 2.81.0 or newer) from ledger.com/ledger-live on your computer (Windows 10+, macOS 11+, Linux).
  • A compatible third-party wallet software (e.g., Sparrow Wallet, Electrum, or a service like Unchained Capital).
  • At least one computer (preferably offline for key generation) and a secure environment.
  • Backup materials (e.g., paper or metal) for recording recovery phrases and wallet descriptors.

Step-by-Step Guide to Setting Up a Multisig Wallet

Step 1: Prepare Your Ledger in Ledger Live

  1. Install Ledger Live:
    • Download and install Ledger Live from ledger.com/ledger-live.
    • Connect your Ledger via USB (all models) or Bluetooth (Nano X), unlock it with your PIN.
  2. Set Up a Bitcoin Account:
    • Open Ledger Live, go to Accounts > Add Account, select “Bitcoin (BTC)”.
    • Install the Bitcoin app on your Ledger via My Ledger—approve the installation on-device.
    • Sync and name the account (e.g., “BTC Single-Sig”).
  3. Fund the Account (Optional):
    • If you plan to transfer funds to the multisig wallet later, send BTC to this account (Receive, verify the address on your Ledger)—e.g., 0.1 BTC.
  4. Update Firmware:
    • Go to My Ledger > Firmware, ensure your device is on the latest version (e.g., Nano X 2.2.1)—approve updates on-device if prompted.

Step 2: Choose a Multisig Configuration

  • Decide on the number of signers and required signatures:
    • 2-of-3: Three keys, two needed to sign—common for personal use with redundancy.
    • 3-of-5: Five keys, three needed—suitable for groups or businesses.
  • For this guide, we’ll use a 2-of-3 setup with one Ledger and two software keys (or additional Ledgers if preferred).

Step 3: Install a Third-Party Multisig Wallet

  • Sparrow Wallet (Recommended for Bitcoin):
    1. Download from sparrowwallet.com (verify the signature for security).
    2. Install on your computer—use an offline machine for key generation if possible.
  • Electrum (Alternative):
    1. Download from electrum.org—verify the GPG signature.
    2. Install and run—opt for offline setup for enhanced security.
  • Unchained Capital (Service-Based):
    1. Sign up at unchained.com—provides a guided multisig setup with Ledger integration.

Step 4: Create the Multisig Wallet

  • Using Sparrow Wallet (Example):
    1. Launch Sparrow:
      • Open Sparrow, select File > New Wallet, name it (e.g., “BTC Multisig”).
    2. Set Multisig Policy:
      • Choose Multi-Signature as the script type (e.g., SegWit: P2WSH).
      • Set “2 of 3” (2 signatures required, 3 total keys).
    3. Add Your Ledger Key:
      • Connect your Ledger, unlock, open the Bitcoin app.
      • In Sparrow, go to Add Signer > Hardware Wallet > Ledger, follow prompts to scan—Sparrow retrieves your Ledger’s extended public key (xpub).
      • Approve on your Ledger—e.g., “Export xpub: m/48’/0’/0’/2’”.
    4. Add Additional Keys:
      • Generate two more keys (e.g., via Sparrow’s software wallet or additional Ledgers):
        • Software: Add Signer > New Software Key, record the recovery phrase offline.
        • Ledger: Repeat the hardware wallet step with another device.
      • You’ll have three xpubs (e.g., Ledger xpub, Software xpub 1, Software xpub 2).
    5. Finalize Wallet:
      • Sparrow combines the xpubs into a wallet descriptor—save this file (e.g., “multisig_wallet.json”) and back it up offline (SD card, paper).
      • Generate a receiving address—e.g., bc1qmultisig….

Step 5: Transfer Funds to the Multisig Wallet

  1. Get Multisig Address:
    • In Sparrow, go to Receive, copy the address (verify it’s a multisig script, starting with “bc1q” for SegWit).
  2. Send from Ledger Live:
    • In Ledger Live, go to Send, select your BTC account, paste the multisig address, enter amount (e.g., 0.05 BTC).
    • Sign the transaction on your Ledger—approve on-device.
  3. Confirm: Check Sparrow’s Transactions tab—funds appear after blockchain confirmation (~10–60 minutes).

Step 6: Sign Transactions with Multisig

  1. Initiate Transaction:
    • In Sparrow, go to Send, enter recipient address and amount (e.g., 0.02 BTC).
  2. Sign with Ledger:
    • Select your 2-of-3 signers—connect your Ledger, sign first (approve “Send 0.02 BTC…” on-device).
  3. Sign with Second Key:
    • Use another device or software key—export the partially signed transaction (PSBT) from Sparrow, sign on the second signer (e.g., another Sparrow instance or Ledger), import back.
  4. Broadcast: Once two signatures are collected, Sparrow sends the transaction—track on blockchain.com.

Step 7: Backup and Secure

  • Recovery Phrases: Store each key’s 24-word phrase offline (e.g., metal backup like Cryptosteel)—never digitally.
  • Wallet Descriptor: Save Sparrow’s descriptor file—needed to reconstruct the wallet if software fails.
  • Test Recovery: Practice restoring the multisig with backups before relying on it fully—e.g., recover on a test device with 2-of-3 keys.

Security Best Practices

  • Verify Software: Download Sparrow/Electrum from official sites—check signatures to avoid malware.
  • Never Share Seed: Your Ledger’s recovery phrase stays offline—don’t enter it anywhere (see “Why Never Share Your Seed”).
  • Check Addresses: Confirm multisig addresses match across tools—use explorers (e.g., blockchain.com) to verify.
  • Offline Signing: Generate software keys on an air-gapped machine—enhances privacy.
  • Update: Keep Ledger Live, Bitcoin app, and firmware current (My Ledger > Firmware).

Limitations

  • No Native Multisig in Ledger Live: You can’t view or sign multisig transactions directly—requires third-party tools post-setup.
  • Complexity: Managing multiple keys and signatures is technical—test small amounts first (e.g., 0.001 BTC).
  • Ethereum Multisig: Ledger supports ETH multisig (e.g., via Safe), but setup is external—Ledger Live only tracks balances.

Example

  • Setup: Create a 2-of-3 multisig with one Ledger Nano X and two Sparrow software keys.
  • Transfer: Send 0.1 BTC from Ledger Live to the multisig address.
  • Spend: Send 0.05 BTC elsewhere—sign with Ledger and one software key in Sparrow, broadcast securely.

Conclusion

Setting up a multisig wallet with Ledger Live involves using your Ledger as a signer alongside tools like Sparrow Wallet—Ledger Live initializes and funds accounts, while Sparrow handles multisig creation and signing. This combo offers unmatched security for Bitcoin, requiring multiple approvals per transaction. Start with a single Ledger account, integrate with Sparrow, and secure your keys—your funds stay safe and decentralized.