multisig wallet electrum

Thank you everyone and welcome to my block this day as I present to you my post for the advanced level lessons presented by Prof @sapwood on Multisig Wallet(Electrum)-- "m of n" Combinations. I will be presenting these questions in a more precise manner...

(1) What is a Multi-sig wallet? How is it different from a Single key wallet? What are the different uses of a Multisig wallet?

What is a Multi-sig Wallet?
The Multisig wallet is another advent of the wallets that is multi-tasking in its feature and a layer ahead of that seen in the Single Key Wallet. The Multisig wallet means that there would be two or more signatures or private keys required in the verification of any transaction done before funds are spent in a given wallet.

This kind of wallet entails that it provides an additional layer of security given to its nature of operation where an individual cannot execute a transaction all alone. There is this requirement of different signatures or cosigners to authorize too before the fund is spent. This also brings us to the combination seen in the Multisig wallet nomenclature, where there are a given number of cosigners and required signatures to make up for them of n combinations.

For Example, where we have 3 persons opening this account, that means we will be having 3 cosigners. And when they agree that at least two persons would authorize before the asset is spent, this means the number of required signatories or private keys would be two (2).

How is it different from a Single key wallet?
I will be making their difference in three (3) categories namely;

Presence of Private Keys: This happens to be the major visible difference between these two kinds of wallets. In the Single Wallet key, there is the presence of only one individual key required before funds are spent from the wallet. For the Multi-sig wallet, there is presence of two or more keys required before funds are spent from the wallet.

Presence of Cosigners: There is a presence of cosigners in the Multi-sig wallet which we knew as individuals having a joint stake in all activities happening in the account. In the Individual or Single Key Wallet, there are no cosigners as the individual does not need any of those to spend his funds.

Security Hierarchy: From the features seen on both wallets and how funds are spent, it is obvious that the Multi-sig wallet has layers of authorization which makes it a lot impossible for malware to attack into the wallet unlike what we have in the single key wallet with just a one-way authorization protocol.

What are the different uses of a Multisig wallet?
From my understanding of the Multisig wallet, I can place its uses on the following;

Family Joint Account: This would work wonders in this place as it will instil discipline where recklessness is on the rise in a family setup. Assets are generated as a family but have to be spent in an agreement from the wallet.

Enterprise Outfits: Enterprises and companies can give their best shot on this as it can uphold regularities and orderliness of how funds are used in the company. In a given company of 10 board of directors and 8 to authorize, it would be difficult to undermine this number and funds skewed towards an unpopular decision.

For Security Purposes: The series of authorization observed in this protocol makes it extremely difficult to break through such a wallet type. Been successful here means that all the 8 private keys have to be compromised which is impossible.

(2) Download, install & set up a 2-of-3 BTC Multisig wallet(Electrum)? What is the difference between Seed key and MPK? Would you share the seed key or MPK with your co-signer and Why? (Screenshots Needed)

Download, install & set up a 2-of-3 BTC Multisig wallet(Electrum)?
I will be using the window platform to illustrate this process for effective usage:

log in to the site by going through https://electrum.org/#download
Click on the "Window Installer"
Click on Install
image.png

image.png

4.Launch the Ethereum App from the Desktop and Name your wallet (W1). Click on Next
5.Choose your wallet type (Multisig Wallet) and Click on NEXT

image.png

image.png

6.You can now choose your combination at this stage. I will be using 3 cosigners and 2 Required Signatures. Slide the bar to provision this setting and click on NEXT
7.Create a new SEED and Click on NEXT

image.png

image.png

Copy your seed key and verify same too
The Master Public Key (MPK) is generated. This is what should be shared with the other cosigners for connectivity. Click on NEXT
image.png

image.png

Select the option "Enter Cosigners Key" and click on Next. This is to provide connectivity with the second Cosigner
Input second cosigner's MPK and click on NEXT
image.png

image.png

Select the option "Enter Cosigners Key" and click on Next. This is to provide connectivity with the Third Cosigner
Input Third cosigner's MPK and click on NEXT
Create your password and re-confirm this password
image.png

image.png

image.png

CONGRATULATIONS YOUR MULTI-SIG WALLET WAS SUCCESSFULLY CREATED.

HOW DO I SET THE RECEIVING ADDRESS FOR THESE WALLETS?

Click on the Receive tab on the top screen
set the Expiry as Never
Than generate the New address by click in on NEW ADDRESS
image.png

To confirm if the other cosigners also have the same Receiving address, repeat the same process as done for Wallet 1

image.png

What is the difference between Seed key and MPK? Would you share the seed key or MPK with your co-signer and Why?
The Seed key serves as the password or private key to the owner's wallet account which enables full recovery of the account in situations withApp the is deleted from a device or restore to another device. I noticed that if we re-download this and restores it with our MPK on an entirely new device, it keeps our account on a "Watching account" without full access to the account to spend funds but when you recover this account with the seed key, it guarantees full access to all wallet activities.

The MPK is an avenue that allows the different Cosigners to interact within themselves in a Multisig Wallet. When it is exchanged during wallet configuration it enables that those layers of approval are integrated amongst themselves and still maintain the great features of the Multisig Wallet. But when the seed key is exchanged, the wallet nomenclature is compromised and the ability to spend funds without caution is not guaranteed.

Why I won't want to share my Seed key is simple, it will undermine my authority to spend funds from the wallet when a request comes up as the other cosigners can integrate my seed key into another device and make a wallet set which undermines my relevance in the chain.

This purely does not stand right in the essence of why the Multisig wallet was created. If seed keys were to be shared, it would be better to continue with the Standard wallets. Therefore, sharing the Seed key undermines the core build-up and additional layer security guaranteed in the wallet type.

How many different "m of n combinations" Multisig wallets you can construct in Electrum? How do you Export your Seed & Private Key(Electrum) in a Multi-sig wallet? (Screenshots needed)

How many different "m of n combinations" Multisig wallets you can construct in Electrum?
There are fifteen (15) of these combinations seen in the Multisig Wallet which makes it very flexible to accommodate all manner of combinations and at all levels too. With this, we can get as high as 15 Cosigners and 15 signatures.

image.png

How do you Export your Seed & Private Key(Electrum) in a Multi-sig wallet?
This only takes a few steps if we understand how to navigate through the Multiseg Wallet;
For Seed

Click on the wallet icon
Click on the Seed option
Enter your wallet password to verify this process
image.png

image.png

For Private Key

Click on the wallet icon
Click on the Private Key option
From the drop-down, select the Export option
Enter your wallet password to verify this process
image.png

image.png

Exporting both the Seed key and Private Key is necessary should in-case we lose these keys where they are kept. This would facilitate better recovery options from the same device.

Perform a real transaction(Send BTC) to another Address using 2 of 3 Multisig wallets? (You can perform a micro-transaction for this Task, also send a partial amount to demonstrate your experience with Change Address, screenshots needed).

This process would be done more concisely;

To Initiate this Transaction from the Wallet:

Click on the send button on the top screen
Enter the receiving address i the "PAY TO" column
Enter the description (Optional) _Used @sapwood Assignment
Enter the Amount; Used 0.08mBTC
you are to click on the PAY button now.
image.png

Click on Finalize Button
Click on Export + Export options to Save files on your device.
image.png

image.png

image.png

When I am done raising the transaction, we have to now involve the cosigners which one of them needs to concur in this process to get it done and money spent from the wallet. So;

Click on the tool icon on the top screen
Select Load Transaction
Import the file from your device as earlier saved.
Sign the Transaction to enable it to achieve the 2 of 3 wallet combination
Enter your password
image.png

image.png

image.png

image.png

You will notice that the "UNSIGNED" status would change to "SIGNED" status.
you can now click on the "Broadcast option".
image.png

image.png

Since I was to send 0.14mBTC out from my wallet balance of 0.16714, I should be expecting a Change Address for the UTXO.

Click on the Addresses on the top screen
The different types of addresses can be differentiated by their colours, the Receiving Address goes with the Green colour while the Change Address goes with the Yellow colour.
image.png

image.png

NOTE:
Blockchain.com helps us to also verify the entire summary of all transactions we have done in the given transaction by entering the Transaction IDs.

What is the difference between Receiving Address & Change Address? Demonstrate your experience with a Change Address?

The Receiving Address is that address that has the value I which we will have to spend funds by undergoing the usual Multisig wallet process. The Receiving Address may be one with the wholesome or more than carrying the individual values but all make up the total funds in the wallet that must be spent in full when a transaction is made.

In a case where the amount transferred to a recipient is lower than the amount in the given Receiving Address, the whole Receiving Address value is spent and the balance kept for a new/another utilization as Change Address; "According to the Bitcoin protocol on non-partial spending.

To Demonstrate this experience, from my transaction my UTXO is 0.17146mBTC, and I sent 0.14mBTC. But since all my Receiving Address value of 0.17146mBTC has to be spent fully first due to I cannot spend it partially, there was room for my balance of 0.025mBTC to be transferred and kept as a Change Address to me should in case I want to transact again.

Thank you respected prof for this great experience you shared, I'm looking forward to adopting this Multisig wallet protocol as a means of regulating expenditures.

#sapwood-s3week5#cryptoacademy#steemexclusive#multisig#electrum#wallet#blockchain
yesterday in SteemitCryptoAcademy by chilaw (61)Beginner[1,2,3,4,5]$51.18

36 votes
Reply 1

Sort: Trending
[-]sapwood (75)MODProfessor[Advanced] 20 hours ago
Thank you for attending the lecture in Steemit-Crypto-Academy Season 3 & doing the homework task-5

I noticed that if we re-download this and restores it with our MPK on an entirely new device, it keeps our account on a "Watching account" without full access to the account to spend funds but when you recover this account with the seed key, it guarantees full access to all wallet activities.

Excellent observation.

Further, go to Addresses tab, you will find a list of address and all of these addresses have their private keys, to know the individual private key of these address, right-click on the Address and then select the private key, it will display you the private key.

image.png

The point to note here is that there is a seed key and there are a number of address associated with the wallet(and en equal nos of private keys). All these public keys(Addresses)+Private Keys are rooted a a single seed(or Master Key), which testifies that it is an HD wallet and in a HD wallet, having a backup of the Seed key is enough to gain access to all other private keys associated with the Wallet.

Why I won't want to share my Seed key is simple, it will undermine my authority to spend funds from the wallet when a request comes up as the other cosigners can integrate my seed key into another device and make a wallet set which undermines my relevance in the chain.

Excellent.

"According to the Bitcoin protocol on non-partial spending.

"According to the Bitcoin protocol on non-partial spending-- UTXO can't be spent partially

But the requirement of a user may be different. Hence to accommodate your use-case of partial spending, it creates another address as output(known as Change Address) and routes the remaining fund back to your wallet.

Observation/Suggestion/Feedback:-

The author has demonstrated(with a real transaction) "How to construct a 2 of 3 Multisig wallet, and how to perform a transaction using Multisig wallet", with all the relevant screenshots included.
The author has also practically showcased his experience with a Change Address using Electrum Wallet.
Center alignment of the screenshots will render the best effects in the context of styling & presentation.
Screenshots are too small to read.
Thank you.