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Motivation With the increase of more user friendly offline multisignature wallets, and adoption of new technologies such as the descriptor language and BIP Partially Signed Bitcoin Transactions , it is necessary to create a common derivation scheme that makes use of all new technologies.
Having a script-per-derivation for single sig wallets allows for easy backup and restore, with just the private key information. Multisignature wallets need more information to backup and restore such as all cosigner public keys , and these per-script derivations are made redundant with descriptors, which provide that information while also specifying a collection of output scripts. A modern standardization is needed for multisig derivation paths.
There are some in existence, but all have issues. This too is redundant, as descriptors can set the order of the public keys with multi or have them sorted lexicographically as described in BIP67 with sortedmulti. Sorting public keys between cosigners in order to create the full derivation path, prior to sending the key record to the coordinator to create the descriptor, merely adds additional unnecessary communication rounds.
As described previously, this is unnecessary, as the descriptor sets the script. The structure proposed later in this paper solves these issues and is quite comprehensive. It allows for the handling of multiple accounts, external and internal chains per account, and millions of addresses per chain, in a multi-party, multisignature, hierarchical deterministic wallet regardless of the script type [ 1 ]. This paper was inspired from BIP Path levels We should not be mixing keys and scripts in the same layer.
Each level has a special meaning, described in the chapters below. Purpose Purpose is a constant set to 87' following the BIP43 recommendation. It indicates that the subtree of this node is used according to this specification. Hardened derivation is used at this level.
Coin type One master node seed can be used for multiple Bitcoin networks. Sharing the same space for various networks has some disadvantages. This level creates a separate subtree for every network, avoiding reusing addresses across networks and improving privacy issues. Coin type 0 for mainnet and 1 for testnets testnet, regtest, and signet. Account This level splits the key space into independent user identities, following the BIP44 pattern, so the wallet never mixes the coins across different accounts.
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