Bitcoin Cold Storage Setup: 12 Steps, 60 Min [2026]

Bitcoin sitting on an exchange is one outage, one insider, or one API bug away from becoming someone else’s problem. Cold storage crypto setups fix that by moving private keys fully offline, then splitting signing power across multiple independent devices so no single point of failure can drain the vault. This tutorial builds a 2-of-3 multisig cold storage wallet from the ground up: three hardware signers, an air-gapped coordinator, and a documented recovery plan you could hand to an heir without exposing a single key.

The timing is relevant. A July 2026 attack targeted Lightning nodes running behind BTCPay Server, where attackers grabbed unauthenticated .macaroon credential files and drained hot wallets tied to those nodes, according to a Crypto.com market update. That’s a hot-wallet failure mode, not a cold storage one. But it’s a clean reminder of why keys that never touch an internet-connected device sit outside the blast radius of API bugs, leaked credentials, and compromised servers. shattered.io covered a similar lesson when a single compromised hardware wallet led to a $100M hardware wallet hack: one device, one point of failure.

By the end of this guide you’ll have a working 2-of-3 vault, a rehearsed spending workflow built on PSBTs (Partially Signed Bitcoin Transactions), and a maintenance checklist that keeps the setup healthy for years. Budget about 60 minutes for the walkthrough itself, plus a few days if you’re waiting on hardware to ship.

Nothing here requires trusting a single company, a single piece of software, or a single physical location. That’s the point of the exercise. Every step is designed so that a mistake, a lost device, or a compromised piece of software can be absorbed without touching the funds. It takes more setup time than clicking “buy” on an exchange, but the tradeoff is a system you actually control end to end.

Why Cold Storage Crypto Setups Matter More in 2026

Cold storage means your private keys are generated and stored on a device that has never connected to the internet, and never will. That’s the whole idea: a hacker on the other side of the world can’t sign a transaction they can’t physically reach. A single cold wallet already beats keeping funds on an exchange or in a browser extension. But a single device is still a single point of failure. Drop it in a fire, lose the seed phrase, or hand it to the wrong person under duress, and the funds are gone or stolen in one move.

Multisig cold storage removes that single point of failure by requiring several independent devices to agree before a transaction can go out. The most common setup is 2-of-3: three separate hardware signers hold three separate keys, and any two of them can authorize a spend. Lose one device, or have one stolen, and your funds are still safe and still spendable with the remaining two. That structure is why 2-of-3 has become the default recommendation across guides from hardware vendors and independent security researchers alike, including Coldcard’s own multisig documentation.

This guide focuses on Bitcoin specifically, using the PSBT standard (BIP174) that every major hardware wallet and coordinator now supports. If you’re also thinking about how quantum computing might affect long-term Bitcoin storage, we’ve covered that separately in our quantum-proof Bitcoin wallet guide. The steps below assume you’re storing Bitcoin you don’t plan to touch often, the exact use case cold storage was built for.

It’s also worth being honest about what multisig cold storage doesn’t fix. It doesn’t protect against a $5 wrench attack if someone knows exactly where every key lives and can coerce you into signing. It doesn’t help if you write recovery instructions so detailed that a single document leak hands over the whole vault. And it adds real complexity: more steps, more hardware, more things that can go wrong during setup. The rest of this guide is built around minimizing those specific risks rather than pretending they don’t exist.

Cold Storage vs Hot Wallets vs Exchange Custody

Before building anything, it helps to see where cold storage sits relative to the alternatives. Each option trades convenience for security in a different way, and the right choice usually depends on how much you’re holding and how often you need to move it.

Factor	Cold Storage (Multisig)	Hardware Hot Wallet	Exchange Custody
Private key location	Offline, split across devices	Offline, single device	Held by the exchange
Internet exposure	None during key generation or signing	None for the key, but device is used often	Constant
Best for balance size	Large, long-term holdings	Medium, occasional spending	Small, active trading
Recovery complexity	Moderate, requires documented process	Low, single seed phrase	Depends on exchange support
Attack surface	Smallest, needs 2+ devices compromised	Small, one device compromised	Largest, exchange is a target
Setup time	~60 minutes	~15 minutes	~5 minutes

When a Single Hardware Wallet Isn’t Enough

A single hardware wallet is a good starting point for anyone new to self-custody, and our seed phrase security guide covers how to back that up properly. The jump to multisig cold storage makes sense once your holdings cross a threshold where losing the device, the seed, or both would be a life-changing event rather than an inconvenient one. There’s no fixed dollar figure that applies to everyone, but if you’d lose sleep over a single point of failure, that’s the signal to move to multisig.

Think about it in terms of what you’re actually defending against. A single hardware wallet defends against remote hackers and browser-based malware, which covers most day-to-day threats. Multisig cold storage adds defense against a stolen or lost device, a single point of physical theft, and a single manufacturer’s undiscovered firmware bug. Each layer costs setup time and adds a little operational overhead, so it’s worth matching the layer to the size of what you’re protecting rather than over-engineering a small balance or under-protecting a large one.

Prerequisites: Hardware, Software, and Skills You Need

Cold storage crypto setups don’t require you to be a developer, but you do need to be comfortable following instructions exactly and double-checking your own work. Here’s what to gather before starting.

Three hardware signing devices from different manufacturers: for example a Coldcard, a Trezor, and a Blockstream Jade. Using different vendors means a single supply-chain issue or firmware bug can’t compromise every signer at once.
A coordinator wallet: this guide uses Sparrow Wallet, a free, open-source desktop application built specifically for multisig and PSBT workflows. See the official Sparrow Wallet documentation for the latest release.
A dedicated air-gapped machine (optional but recommended): an old laptop with Wi-Fi and Bluetooth physically disabled, or a Raspberry Pi running a minimal OS, used only to run the coordinator and handle PSBTs via microSD card or QR code.
Two or three blank microSD cards: for transferring PSBTs between an air-gapped coordinator and each signer.
A Bitcoin full node (optional, recommended for larger balances): running your own node with the latest Bitcoin Core release lets you verify the blockchain independently instead of trusting a third-party server. Bitcoin Core 30.3 shipped July 8, 2026, with Bitcoin Core 29.4 following July 13, 2026, per the official Bitcoin Core version history.
Something durable to record seed phrases on: steel backup plates survive fire and water far better than paper, and cost roughly $15 to $50 per plate depending on capacity and material.
About 60 minutes of uninterrupted time: rushing key generation or seed recording is where most mistakes happen, so treat this as a task that deserves a quiet room and a closed door, not something squeezed between meetings.

None of these items are exotic. Every piece of hardware here ships from mainstream retailers or directly from the manufacturer, and the software is free and open source. The only real cost is time spent double-checking each step, which is exactly where this guide focuses.

You do not need programming experience, but you’ll be typing commands into a terminal in a few steps, and you’ll need to read hexadecimal strings carefully. If that sounds outside your comfort zone, a single well-backed-up hardware wallet is still a reasonable choice, just with the single-point-of-failure tradeoff described above.

Step 1: Pick Your Multisig Threshold

Before buying anything, decide on a threshold. This is the “M-of-N” configuration: N total signers, M required to approve a spend. The table below covers the common options.

Configuration	Devices Needed to Spend	Devices That Can Be Lost	Typical Use Case
1-of-1	1	0	Standard single hardware wallet, not multisig
2-of-2	2	0	Joint accounts, rarely recommended alone (no redundancy)
2-of-3	2	1	Individual long-term cold storage (most common)
3-of-5	3	2	Family or business treasury, geographic distribution

For most individuals, 2-of-3 is the sweet spot. It survives losing any single device or key without locking you out, and it only requires an attacker to compromise two of three independent signers to steal funds, which is a meaningfully higher bar than a single device. This guide uses 2-of-3 throughout, but every step scales to 3-of-5 if you’re setting this up for a family or small business treasury.

Resist the urge to over-engineer this decision. A 5-of-9 setup sounds more secure on paper, but in practice it means coordinating nine devices across storage locations and gathering five of them every time you need to move funds, which usually pushes people toward shortcuts that quietly undermine the extra security. A threshold you’ll actually maintain correctly beats a more elaborate one you’ll eventually work around.

Step 2: Buy Signing Devices From Different Vendors

Buy your three devices directly from the manufacturers, not from a marketplace reseller or a secondhand listing. A tampered device is one of the few attack vectors that good operational security afterward can’t undo. Spread your purchases across at least two different manufacturers, ideally three, so a single firmware vulnerability or supply-chain compromise can’t touch every key at once. Pricing varies by device and region, so check each manufacturer’s official store for current figures rather than relying on a number that may already be out of date by the time you read this.

Open-source firmware is worth prioritizing where possible. It means the code that generates and guards your keys can be independently audited rather than trusted on faith. Coldcard, Trezor’s Safe series, and Blockstream’s Jade all publish open-source firmware and all support the descriptor-based multisig standard this guide uses.

Device Family	Open Source Firmware	Air-Gapped Signing Method	Coordinator Compatibility
Coldcard (Mk4 / Q)	Yes	microSD card or QR code	Sparrow, Specter, Electrum
Trezor (Safe series)	Yes	USB (not fully air-gapped)	Sparrow, Trezor Suite
Blockstream Jade	Yes	QR code	Sparrow, Blockstream Green
Foundation Passport	Yes	microSD card or QR code	Sparrow, Specter

If full air-gapping matters to you, note that not every device supports it the same way. Devices that transfer data only via microSD card or QR code never touch a USB cable connected to an internet-capable computer, which is the strongest version of “cold.”

Step 3: Verify Firmware Before You Touch a Seed

Never generate a seed on a device running firmware you haven’t verified. Every reputable manufacturer publishes a SHA-256 checksum and a GPG signature alongside each firmware release. Check both before updating any device, and definitely before generating a key on it. This single habit closes off an entire category of attack: a tampered firmware image that looks identical to the real thing but silently leaks your seed or weakens your signatures.

# Verify a downloaded firmware image (Linux/macOS)
shasum -a 256 coldcard-firmware-signed.dfu

# Compare the output against the published hash on the vendor's release page,
# then verify the GPG signature
gpg --verify coldcard-firmware-signed.dfu.sig coldcard-firmware-signed.dfu

# On Windows, use certutil instead of shasum
certutil -hashfile coldcard-firmware-signed.dfu SHA256

Download firmware only from the manufacturer’s official site, never from a forum link, a mirror, or a third-party download aggregator. If the hash doesn’t match exactly, stop and re-download from the source rather than assuming it’s a rounding error. It isn’t.

Step 4: Set Up Sparrow Wallet as Your Coordinator

Sparrow Wallet acts as the “brain” of your multisig setup. It never holds a private key itself, it just tracks balances, builds transactions, and passes PSBTs back and forth to your signers. Install the latest release from the official Sparrow Wallet site, and verify its checksum the same way you did for the hardware firmware in Step 3.

If you’re running Sparrow on an air-gapped machine, install it there directly rather than copying files over from a connected computer. If you’re connecting Sparrow to your own Bitcoin Core node instead of a public server, point it at your node’s RPC address in Sparrow’s connection settings. Running your own node means every balance and transaction you see is verified against the blockchain you’re validating yourself, not a number reported by someone else’s server.

If you don’t want to run a full node yet, Sparrow can also connect to a public Electrum server over Tor, which trades some verification independence for a much faster setup. That’s a reasonable starting point while you get comfortable with the rest of the workflow, and you can switch to your own node later without rebuilding the wallet.

Step 5: Initialize Each Device and Record Seeds Separately

Initialize each of your three signers one at a time, in a private location, with only one device unlocked at a time. Each device generates its own independent 12- or 24-word seed phrase. Write each seed phrase down on its own steel backup plate or paper backup, and store the three backups in three different physical locations.

This is the step people rush, and it’s the one that matters most. If all three seed phrases end up in the same drawer, you’ve built a multisig wallet that behaves like a single point of failure the moment someone finds that drawer. The whole benefit of 2-of-3 disappears if the three keys aren’t actually independent in the real world, not just on paper.

Step 6: Generate the Multisig Wallet Descriptor

With all three devices initialized, connect each one to Sparrow (or import its public key export file if working air-gapped) to build the multisig wallet descriptor. This descriptor defines the wallet’s structure, which extended public keys are involved, the threshold, and the script type, without ever containing a private key.

# Example 2-of-3 native segwit multisig descriptor (P2WSH)
# Fingerprints and xpubs shown are illustrative, not real keys
wsh(sortedmulti(2,
  [c0ffee01/48h/0h/0h/2h]xpub6D...signer1.../0/*,
  [c0ffee02/48h/0h/0h/2h]xpub6E...signer2.../0/*,
  [c0ffee03/48h/0h/0h/2h]xpub6F...signer3.../0/*
))#checksum

Export this descriptor and back it up separately from your seed phrases. Losing the descriptor alone won’t lose your funds if you still have the seeds and know the derivation path, but having it on hand saves significant time during recovery. Sparrow lets you export it as a text file or a QR code from the wallet settings screen.

Step 7: Cross-Check Receive Addresses on Every Signer

Before funding anything, generate a receive address in Sparrow and verify it independently on all three hardware devices’ own screens. This step catches a specific and dangerous class of bug: a compromised coordinator displaying a correct-looking address on your monitor while a different address is what actually gets embedded in the descriptor.

# Compare the same receive address independently on each signer's own screen
# Coldcard:  Address Explorer -> m/48'/0'/0'/2'/0/0
# Trezor Suite:  Receive tab -> "Show on device"
# Sparrow / Specter:  Addresses tab, index 0
# All three displayed addresses must match exactly, character for character

Do this for the first three or four addresses in the sequence, not just one. It takes a couple of extra minutes and it’s the cheapest insurance in the entire process.

Step 8: Fund the Vault With a Small Test Transaction

Send a small, disposable amount to the vault’s verified receive address first, something you could afford to lose entirely if something went wrong. Confirm it arrives, shows the correct balance in Sparrow, and that the transaction confirms on the blockchain as expected. Only after that test succeeds should you move meaningful funds in.

This isn’t paranoia, it’s standard practice for any new wallet setup regardless of how carefully you followed the previous steps. A typo in a descriptor, a mismatched derivation path, or a coordinator bug can all produce a wallet that looks correct but isn’t. A test transaction surfaces those problems while the cost of being wrong is a few dollars instead of your entire balance.

Step 9: Rehearse a Full PSBT Signing Round-Trip

Before you consider the vault operational, send that test amount back out. This exercises the entire spending workflow: building a transaction in Sparrow, signing it with two of your three devices, and broadcasting the finalized transaction. If you’re using a Bitcoin Core node directly instead of Sparrow’s built-in broadcaster, the command sequence looks like this.

# Build an unsigned PSBT paying out from the multisig wallet
bitcoin-cli -rpcwallet=cold-vault walletcreatefundedpsbt \
  '[]' '[{"bc1qYourTestDestination...":0.0001}]'

# Sign with the first device (import its PSBT signature back into the wallet)
bitcoin-cli -rpcwallet=cold-vault walletprocesspsbt ""

# Sign with the second device
bitcoin-cli -rpcwallet=cold-vault walletprocesspsbt ""

# Finalize once two of three signatures are present
bitcoin-cli finalizepsbt ""

# Broadcast the finalized transaction
bitcoin-cli sendrawtransaction ""

Practice this while the stakes are low. The first time you sign a multisig transaction should not be during an emergency, when you’re moving your entire balance off a device you’re worried is compromised. Muscle memory matters here as much as the technical setup does.

Pay attention to the transaction fee Sparrow proposes during this rehearsal, too. Multisig transactions carry more data than a single-signature spend, since they include multiple public keys and signatures in the witness data, so they cost more in fees at the same priority level. Getting comfortable with that difference now means you won’t be surprised by it later when moving a larger amount.

Step 10: Split Keys Across Physical Locations

Once the vault is tested and working, distribute the three devices and their seed backups across different physical locations: your home, a bank safe deposit box, a trusted family member’s home, or a secure storage facility. The goal is that no single fire, flood, burglary, or natural disaster can wipe out more than one of your three keys at a time.

Keep in mind the tradeoff between security and accessibility. A key stored across the country is very safe from local disasters but slow to retrieve if you actually need to spend. Most people land on one device kept close for convenience, one stored somewhere secure but reachable within a day, and one held further away as a true disaster-recovery backup.

Step 11: Write an Inheritance and Recovery Plan

A cold storage vault that only you understand is a liability to the people you’d want to inherit it. Write clear, step-by-step recovery instructions: which devices exist, roughly where they’re stored (without turning the document itself into a treasure map), what the threshold is, and which software is needed to reconstruct the wallet from the descriptor and any two seed phrases.

Store this document separately from the keys themselves, and consider splitting the actual location details among a lawyer, a trusted family member, or a safe deposit box, so no single document leak exposes both the instructions and the keys. The goal is that someone with basic technical competence could recover the funds using your instructions and the physical devices, without needing you to walk them through it live.

A growing number of estate attorneys now handle digital asset instructions as a standard part of estate planning, so it’s worth asking whether yours does before writing this document entirely on your own. A lawyer can also help you decide how much detail belongs in a will (which becomes a public record during probate in most US states) versus a separate, private letter of instruction that only named parties receive.

Step 12: Put Maintenance on a Calendar

Cold storage isn’t a “set it and forget it” project. Schedule a recurring check, every six to twelve months, to confirm firmware is current on each device, backups are still legible and undamaged, and the recovery plan document still matches reality if anything about your setup changed. Use this checkpoint to do a small dry-run spend if you haven’t moved funds recently, just to confirm the whole chain still works end to end.

Bitcoin Core, Sparrow Wallet, and every major hardware signer ship regular updates. Following the release notes for whichever full node software you run, and cross-referencing changes against sources like the Bitcoin Optech newsletter, keeps you aware of anything that might affect how your setup behaves.

Common Pitfalls When Setting Up Cold Storage Crypto Vaults

Buying all three signing devices from the same batch or reseller. This defeats the supply-chain protection that vendor diversity is supposed to provide.
Skipping the test transaction. Moving your full balance in before confirming the setup works is how a small configuration mistake becomes a total loss.
Storing all three seed backups in one place. A fireproof safe with three seed cards inside is functionally a single point of failure, no matter how sturdy the safe is.
Never rehearsing a spend. The first attempt at signing a multisig transaction under pressure, during an actual emergency, is the wrong time to discover a step you misunderstood.
Using a general-purpose, internet-connected laptop as an “air-gapped” coordinator. If the machine has ever been online, it isn’t air-gapped, full stop.
Forgetting to back up the wallet descriptor, not just the seed phrases. Recovery without the descriptor is still possible but far slower and more error-prone.
Assuming the setup is finished once funded. Firmware updates, address verification, and dry-run spends are ongoing responsibilities, not one-time tasks.

Troubleshooting Your Multisig Cold Storage Setup

Even a carefully followed setup runs into friction. Most of it traces back to one of two causes: a mismatch between what the coordinator expects and what a device provides, or a step that got skipped under time pressure. Here are the issues that come up most often, and how to work through them.

Coordinator shows “no available UTXOs” after funding. Check that the address you funded matches the one Sparrow is watching, and confirm the wallet’s gap limit hasn’t skipped past the funded address index.
PSBT signing fails between devices from different brands. Confirm every device firmware supports BIP174 PSBTs and that you’re exporting from the correct account/derivation path, not a single-sig account on the same device.
Descriptor checksum mismatch when importing. A single character typo anywhere in the descriptor breaks the checksum. Re-export from the source rather than retyping by hand.
A firmware update stalls or fails mid-process. Don’t disconnect power or cables during an update. Most vendors document a recovery mode for exactly this scenario, check the manufacturer’s support page before attempting anything else.
A microSD card used to transfer a PSBT goes missing. A PSBT alone can’t move funds without a valid signature, but treat it as sensitive and reformat or destroy old cards rather than reusing them carelessly.
xpub or fingerprint mismatch after a device reset. This usually means the device was reinitialized with a new seed rather than restored from the existing one. Double-check you restored from the correct backup phrase.
Address shown by the coordinator doesn’t match the device screen. Stop immediately and do not fund that address. Re-verify the descriptor import on all three devices before proceeding.
Full node stuck re-scanning after importing the wallet descriptor. This is expected if you set the import timestamp earlier than needed. Set the timestamp to the approximate date you first funded the wallet rather than “now” or the chain’s genesis to shorten the scan.
Sparrow won’t reconstruct the wallet after a fresh install. Confirm you’re entering the exact same derivation path and script type (P2WSH vs P2SH-P2WSH vs Taproot) used during the original setup. A mismatched path produces an empty wallet even with correct seeds.

Advanced Tips: Miniscript, Timelocks, and Taproot Multisig

Once the base 2-of-3 vault is working, a few more advanced options are worth knowing about, even if you don’t implement them on day one. None of these require rebuilding the vault from scratch, but each does require creating a new wallet descriptor and moving funds, so they’re worth planning for up front rather than bolting on later.

Miniscript is a language for writing more expressive Bitcoin spending policies than plain multisig, letting you combine conditions like “2-of-3 normally, but a single key can spend after a 6-month timelock” into one wallet descriptor. Sparrow has growing support for Miniscript policies, and it’s worth exploring once you’re comfortable with basic multisig.

Timelocks add a recovery path for inheritance scenarios: a spending condition that only activates after a set block height or time period, giving a designated backup signer access if the primary holders become unavailable. This can reduce reliance on trusting a single person with full recovery instructions.

Taproot multisig (P2TR script paths) reduces the on-chain footprint of a multisig spend compared to older P2WSH scripts, which can mean lower fees over time, though hardware wallet support for Taproot multisig specifically is still maturing across vendors as of mid-2026. Check your specific devices’ current firmware notes before switching an existing vault’s script type, since migrating means creating a new wallet and moving funds, not converting one in place.

It’s also worth keeping an eye on the broader direction of Bitcoin’s signing infrastructure. Lightning Labs shipped LND v0.21.0-beta on June 11, 2026, adding production-ready Taproot channel support alongside privacy-preserving onion messages, according to the official LND release announcement. Blockstream’s Core Lightning 26.06, released the same month, went further and introduced experimental “quantum-resistant Lightning channels,” as detailed in Blockstream’s Q2 2026 quarterly update. None of that changes how you sign a standard on-chain multisig transaction today, but it signals where wallet software is headed. If long-term quantum resistance for cold storage specifically is a concern, our quantum-proof Bitcoin wallet guide covers that in depth.

The Complete Working Project: Command Reference

Here’s the full setup condensed into a single reference, from firmware verification through the first spend. Treat this as a checklist to run through once, then keep for future audits of the same vault. Print it, or save it alongside your recovery documentation, so future maintenance sessions don’t require re-reading the whole tutorial from the top.

Choose 2-of-3 (or 3-of-5) as your threshold.
Buy three signing devices from at least two different manufacturers.
Verify firmware checksums and GPG signatures before touching a seed.
Install Sparrow Wallet and verify its checksum.
Initialize each device separately, recording each seed on its own steel backup.
Build the multisig descriptor in Sparrow using all three devices’ public keys.
Cross-verify the first several receive addresses on every device’s own screen.
Fund the wallet with a small, disposable test amount.
Sign and broadcast a test spend using two of the three devices.
Distribute the three devices and backups across separate physical locations.
Document a recovery and inheritance plan, stored separately from the keys.
Schedule a recurring maintenance check every six to twelve months.

# Quick reference: confirm your node and wallet software versions
bitcoind -version
bitcoin-cli getnetworkinfo | grep subversion
bitcoin-cli -rpcwallet=cold-vault getwalletinfo | grep -E "descriptors|private_keys_enabled"

Running that last command against a properly configured watch-only multisig wallet should show private_keys_enabled: false, confirming your node itself holds no private key material, only the descriptor needed to watch and build transactions.

Frequently Asked Questions

How much Bitcoin do I need before cold storage crypto setups make sense?

There’s no fixed threshold. The right test is whether losing a single device or seed phrase to theft, fire, or a mistake would meaningfully hurt you. If the answer is yes, multisig cold storage is worth the extra setup time.

Is a 2-of-3 multisig actually safer than one well-secured hardware wallet?

Against theft and device failure, yes. An attacker needs to compromise two independent devices instead of one, and you survive losing any single key. Against your own error during setup, a single hardware wallet with a well-tested backup is simpler and has fewer steps that can go wrong.

Can I add a fourth signer later without moving funds?

No. Changing the threshold or the set of signers changes the wallet descriptor, which changes the receiving addresses. You’d need to create a new wallet with the updated configuration and move funds to it, the same way you would when migrating script types.

What happens if one of my three devices breaks?

In a 2-of-3 setup, you can still spend using the remaining two devices, or restore the broken one from its seed phrase onto a replacement device. This is the entire point of the threshold: losing one signer doesn’t lock you out.

Do I need to run my own Bitcoin full node?

Not strictly, Sparrow can connect to a public Electrum server instead. But running your own node means you’re verifying the blockchain yourself rather than trusting someone else’s server for balances and transaction data, which matters more as the amount you’re storing grows.

Does this process work for coins other than Bitcoin?

The specific tools here, Sparrow Wallet, PSBTs, descriptor-based multisig, are Bitcoin-specific. Other chains have their own multisig standards and tooling (Gnosis Safe for Ethereum, for example), with different tradeoffs and different levels of hardware wallet support.

How often should I test the recovery process?

Once thoroughly at setup, then a lighter dry-run spend every six to twelve months as part of routine maintenance. The goal is that signing a multisig transaction never feels unfamiliar, even if you rarely spend from cold storage.

What’s the biggest mistake beginners make with multisig cold storage?

Storing all three seed backups together for convenience. It feels safer to have everything in one fireproof box, but it recreates the single point of failure that multisig was built to eliminate. Independence in storage location matters as much as independence in device hardware.