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Creating Your Multisig in Sparrow Wallet

Sparrow Wallet is the best free option for managing multisig wallets. This guide walks through creating a 2-of-3 multisig step by step.

Prerequisites​

Before starting:

Step 1: Connect Sparrow to a Server​

For maximum privacy, connect Sparrow to your own Bitcoin node. If you don't have one yet, you can use a public server to start (but plan to run your own for privacy).

  1. Open Sparrow Wallet
  2. Go to File → Preferences → Server
  3. Choose your connection type:
    • Bitcoin Core — If running your own node
    • Private Electrum — Your own Electrum server
    • Public Server — Acceptable for testing (less private)
  4. Click Test Connection then Close

Step 2: Create New Multisig Wallet​

  1. Go to File → New Wallet
  2. Enter a name (e.g., "My Multisig Vault")
  3. Click Create Wallet

You'll see the Settings screen with configuration options.

Step 3: Configure Multisig Settings​

Policy Type​

  1. Change Policy Type from "Single Signature" to "Multi Signature"

Signature Settings​

  1. Set the signature requirement:
    • M (Cosigners required): 2
    • N (Total cosigners): 3

This creates a 2-of-3 multisig.

Script Type​

  1. Leave as Native Segwit (P2WSH) — Most efficient and recommended

Your settings should show: 2 of 3 Multi Signature (Sorted Multi, Native Segwit)

Step 4: Add Keystore 1 (First Hardware Wallet)​

Below the settings, you'll see tabs for Keystore 1, Keystore 2, and Keystore 3.

For USB-Connected Devices (Trezor, Ledger, BitBox)​

  1. Click on Keystore 1 tab
  2. Click "Connected Hardware Wallet"
  3. Connect your first hardware wallet via USB
  4. Click "Scan..." in the dialog
  5. Your device should appear—click on it
  6. Unlock the device with your PIN
  7. Click "Import Keystore"

The keystore details will populate:

  • Label: (Rename to identify this device, e.g., "Trezor - Home")
  • Master fingerprint: Should match what you recorded
  • Derivation: m/48'/0'/0'/2' (standard for multisig)
  • xpub: Extended public key

For Air-Gapped Devices (Coldcard, Keystone)​

  1. Click on Keystore 1 tab
  2. Click "Airgapped Hardware Wallet"
  3. Select your device type (e.g., "Coldcard Multisig")
  4. Choose import method:
    • Import File: Insert MicroSD with exported JSON
    • Scan QR: Use camera to scan device's QR code
  5. Select the file or complete the scan
  6. The keystore details will populate

Rename the label to identify which device (e.g., "Coldcard - Key #1")

Step 5: Add Keystore 2​

  1. Click the Keystore 2 tab
  2. Repeat the process for your second hardware wallet
  3. Use the appropriate method (USB or air-gapped)
  4. Label appropriately (e.g., "Keystone - Key #2")
  5. Verify the fingerprint matches your records

Step 6: Add Keystore 3​

  1. Click the Keystore 3 tab
  2. Repeat the process for your third hardware wallet
  3. Label appropriately (e.g., "Ledger - Key #3")
  4. Verify the fingerprint matches your records

Step 7: Apply and Save​

  1. Review all three keystores:
    • Each should have a unique fingerprint
    • Labels should clearly identify each device
  2. Click "Apply"
  3. You'll be asked to set a password (optional but recommended)
  4. Click "Save"

Your wallet is now created!

Step 8: Register Multisig on Hardware Wallets​

Critical step! Your hardware wallets need to know about the multisig to verify addresses.

Coldcard Registration​

  1. In Sparrow, go to Settings tab
  2. Click Export... at the bottom
  3. Select "Coldcard Multisig" and save to MicroSD
  4. Insert MicroSD into Coldcard
  5. On Coldcard: Settings → Multisig Wallets → Import from SD
  6. Review and confirm the wallet details
  7. Coldcard will now verify multisig addresses

Keystone Registration​

  1. In Sparrow, click Export...
  2. Select "Keystone Multisig" and choose "Show QR"
  3. On Keystone: Menu → Multisig Wallet → Import Multisig
  4. Scan the QR code displayed by Sparrow
  5. Confirm the wallet details

Trezor / Ledger / BitBox​

These devices register automatically when you verify an address:

  1. Go to Receive tab in Sparrow
  2. Click Display Address on the hardware wallet
  3. The device will show the multisig configuration for confirmation
  4. Verify and confirm

Step 9: Verify Your First Address​

Never deposit to an address without verifying it!

  1. Go to the Receive tab
  2. You'll see your first multisig receive address
  3. Click "Display Address" for each hardware wallet
  4. Each device should display the exact same address
  5. Confirm on each device

If addresses don't match on all devices, STOP — something is wrong.

ADDRESS VERIFICATION:
────────────────────────────────────────
Sparrow shows:    bc1q8n5...xyz
Coldcard shows:   bc1q8n5...xyz  ✓
Keystone shows:   bc1q8n5...xyz  ✓
Trezor shows:     bc1q8n5...xyz  ✓

All match = Safe to receive!

Step 10: Backup Your Wallet Descriptor​

Essential! Without this, you cannot recreate your multisig even with all seeds.

Export as PDF​

  1. Go to Settings tab
  2. Click the QR code icon (top right of settings)
  3. Click "Save PDF..."
  4. Save and print this document
  5. Store copies with each seed phrase backup

Export as File​

  1. Click Export... at bottom of Settings
  2. Select "Sparrow" to export wallet file
  3. Save the .json file to multiple locations

The PDF contains:

  • QR code of your wallet descriptor
  • All three xpubs with fingerprints
  • Derivation paths
  • Script type

Store this with your seed backups — you'll need it for recovery.

Making Your First Transaction​

Receiving Bitcoin​

  1. Go to Receive tab
  2. Click Get Next Address for a new address
  3. Verify on at least 2 hardware wallets
  4. Send a small test amount first
  5. Wait for confirmation

Sending Bitcoin​

  1. Go to Send tab
  2. Enter recipient address
  3. Enter amount
  4. Set fee (check mempool.space for current rates)
  5. Click "Create Transaction"
  6. Click "Finalize Transaction for Signing"

Signing the Transaction​

You need 2 of 3 signatures. Here's the process:

With USB devices:

  1. Connect first hardware wallet
  2. Click "Sign"
  3. Verify transaction details on device
  4. Confirm on device
  5. Disconnect, connect second device
  6. Click "Sign" again
  7. Verify and confirm on second device

With air-gapped devices:

  1. Click "Save PSBT" to MicroSD (or show QR)
  2. Load PSBT on first device and sign
  3. Export signed PSBT back to computer
  4. Load into Sparrow
  5. Repeat with second device

Broadcast:

  1. After 2 signatures, click "Broadcast Transaction"
  2. Your transaction is sent to the network
SIGNING FLOW:
─────────────────────────────────────────────
Sparrow creates PSBT (unsigned transaction)
        ↓
Device #1 signs → Now have 1 of 2 needed
        ↓
Device #2 signs → Now have 2 of 2 needed ✓
        ↓
Sparrow broadcasts to network

Important Tips​

Address Verification​

Always verify on devices before depositing significant amounts:

  • First deposit to a new wallet
  • After software updates
  • Periodically for ongoing deposits

Test Transaction First​

Before depositing large amounts:

  1. Send a small test amount (e.g., $10)
  2. Verify it appears in your wallet
  3. Send it back out (proves you can spend)
  4. Now you know everything works

Keep Sparrow Updated​

Sparrow receives security updates:

  1. Check for updates regularly
  2. Verify download signatures
  3. Update promptly for security fixes

Troubleshooting​

Device Not Detected​

  • Check USB cable (try a different one)
  • Try a different USB port
  • Ensure device is unlocked
  • Check that Bitcoin app is open (Ledger)

Addresses Don't Match​

  • Verify you imported the correct xpubs
  • Check derivation paths match (should be m/48'/0'/0'/2')
  • Ensure all devices are registered with the same multisig
  • Try re-exporting and re-importing the wallet to devices

Transaction Won't Sign​

  • Ensure PSBT is for the correct wallet
  • Verify device has the multisig registered
  • Check that you're signing with a key from this multisig

Summary​

You now have a working 2-of-3 multisig wallet:

  1. ✅ Three hardware wallets initialized
  2. ✅ Multisig created in Sparrow
  3. ✅ All devices registered with the multisig
  4. ✅ Addresses verified on multiple devices
  5. ✅ Wallet descriptor backed up

Next step: Ensure your backups are properly secured.

→ Continue to Backup & Recovery