[Bitcoin-development] Proposal: "No-Collision" mode for Multisig BIP32 Wallets

[Alan Reiner <etotheipi@gmail.com>]

This topic has been touched on briefly here before, but I wanted to
solidify it and propose it as a BIP if there is wider support for it. 
Also, the topic is difficult to discuss without lots of pictures -- so
that's what I've done (mainly to describe it to my team, but also as
general documentation).  It's in presentation form:

https://s3.amazonaws.com/bitcoinarmory-media/MultisigWalletNoCollide.pdf

The proposal is that for an M-of-N multisig wallet based on BIP32, there
should be N internal chains and N external chains.  Each party is
assigned a chain based on the lexicographic ordering of their wallet's
root public key in the multisig.   This guarantees that no parties are
generating and distributing the same addresses, and also provides a
certain level of built-in book-keeping.  Coins being received on chain
2*x were created by participant x (receiving), and coins received on
2*x+1 are change outputs created by participant x (outgoing).  Thus,
it's easy from simply looking at the wallet structure who was
responsible for which transactions.

Alternatively, we could change it to suggest that each "device" is
assigned a pair of chains.  For a 2-of-3 there may 3 participants plus a
CFO with a "watch-only" version of the multisig wallet.  Then you might
use four pairs of chains.  I'm just not sure how they would be assigned.

If this has been proposed before, then consider this my contribution to
documentation. 
-Alan

P.S. -- "No-Collision Mode" is not a great name.  Happy to take
suggestions for changing it.