Understanding TSS (Threshold Signature Scheme) Wallets

Modified on Wed, 15 Jul at 3:51 PM

Understanding TSS (Threshold Signature Scheme) Wallets

What is TSS?

TSS (Threshold Signature Scheme) is a method for signing blockchain transactions without any single party ever holding the complete private key. Instead, the key is generated in a distributed way — multiple parties each hold a key share, and a minimum number of shares (the "threshold") must come together to produce a valid signature.

At no point during key generation or transaction signing is the full private key ever constructed. This eliminates the risk of a single point of compromise.

How does TSS differ from Multi-Sig?

	Multi-Sig	TSS
How it works	Multiple separate keys each produce their own signature	One key is split into shares; shares combine to produce a single signature
On-chain footprint	Multiple signatures stored on-chain — higher gas fees	One signature stored on-chain — lower gas fees
Blockchain support	Requires native protocol support or a smart contract	Works with any blockchain — no smart contract needed
Accountability	On-chain record shows which keys signed	On-chain record only shows a valid signature was produced

How does BitGo use TSS?

BitGo's TSS wallets use a 2-of-3 key share model:

User key share — held by you.
BitGo key share — held by BitGo.
Backup key share — held by you, stored offline for recovery.

Any two of these three shares can produce a valid transaction signature. This means:

During normal operations, your user key share and BitGo's key share sign transactions together.
If BitGo is unavailable, you can use your user and backup key shares independently.
If you lose access to your user key share, your backup key share and BitGo's key share can be used to recover access.