BIP: 48
  Layer: Applications
  Title: Multi-Account/Multi-Script Hierarchy for Deterministic Multi Signature Wallets
  Author: Peter Denton 
  Comments-Summary: No comments
  Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP-0048
  Status: Proposed
  Type: Standards Track
  Created: 2020-12-16
==Abstract== This BIP defines a logical hierarchy for deterministic multi-sig wallets based on an algorithm described in BIP-0067 (BIP67 from now on), BIP-0032 (BIP32 from now on), purpose scheme described in BIP-0043 (BIP43 from now on), and multi-account hierarchy described in BIP-0044 (BIP44 from now on). This BIP is a particular application of BIP43. ==Motivation== The hierarchy proposed in this paper is quite comprehensive. It allows the handling of multiple accounts, external and internal chains per account, multiple script types and millions of addresses per chain. ==Key sorting== Any wallet that supports BIP48 inherently supports deterministic key sorting as per BIP67 so that all possible multi-signature addresses/scripts are derived from deterministically sorted public keys. ==Path levels== We define the following 6 levels in BIP32 path: 
m / purpose' / coin_type' / account' / script_type' / change / address_index
h or ' in the path indicates that BIP32 hardened derivation is used. Each level has a special meaning, described in the chapters below. ===Purpose=== Purpose is a constant set to 48' 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. Avoiding reusing addresses across networks and improving privacy issues. Coin type 0 for mainnet and 1 for testnet. Hardened derivation is used at this level. ===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. Users can use these accounts to organize the funds in the same fashion as bank accounts; for donation purposes (where all addresses are considered public), for saving purposes, for common expenses etc. Accounts are numbered from index 0 in sequentially increasing manner. This number is used as child index in BIP32 derivation. Hardened derivation is used at this level. Software should prevent a creation of an account if a previous account does not have a transaction history (meaning none of its addresses have been used before). Software needs to discover all used accounts after importing the seed from an external source. Such an algorithm is described in "Account discovery" chapter. ===Script=== This level splits the key space into three separate script_type(s). To provide backward and forward compatibility. The following represent mainnet, account 0: The recommended default is pay to witness script hash m/48'/0'/0'/2'. 1': Nested Segwit (p2sh-p2wsh) m/48'/0'/0'/1'
2': Native Segwit (p2wsh) m/48'/0'/0'/2'
3': Legacy (p2sh) m/48'/0'/0'/3'
===Change=== Constant 0 is used for external chain and constant 1 for internal chain (also known as change addresses). External chain is used for addresses that are meant to be visible outside of the wallet (e.g. for receiving payments). Internal chain is used for addresses which are not meant to be visible outside of the wallet and is used for return transaction change. Public derivation is used at this level. ===Index=== Addresses are numbered from index 0 in sequentially increasing manner. This number is used as child index in BIP32 derivation. Public derivation is used at this level. ==Account discovery== When the master seed is imported from an external source the software should start to discover the accounts in the following manner: * derive the first accounts node (index = 0) * derive the external chain node of this account * scan addresses of the external chain; respect the gap limit described below * if no transactions are found on the external chain, stop discovery * if there are some transactions, increase the account index and go to step 1 This algorithm is successful because software should disallow creation of new accounts if previous one has no transaction history, as described in chapter "Account" above. Please note that the algorithm works with the transaction history, not account balances, so you can have an account with 0 total coins and the algorithm will still continue with discovery. ===Address gap limit=== Address gap limit is currently set to 20. If the software hits 20 unused addresses in a row, it expects there are no used addresses beyond this point and stops searching the address chain. We scan just the external chains, because internal chains receive only coins that come from the associated external chains. Wallet software should warn when the user is trying to exceed the gap limit on an external chain by generating a new address. ==Examples== {| |network |account |script |chain |address |path |- |mainnet |first |p2wsh |external |first |m / 48' / 0' / 0' / 2' / 0 / 0 |- |mainnet |first |p2wsh |external |second |m / 48' / 0' / 0' / 2' / 0 / 1 |- |mainnet |first |p2wsh |change |first |m / 48' / 0' / 0' / 2' / 1 / 0 |- |mainnet |first |p2wsh |change |second |m / 48' / 0' / 0' / 2' / 1 / 1 |- |mainnet |second |p2wsh |external |first |m / 48' / 0' / 1' / 2' / 0 / 0 |- |mainnet |second |p2wsh |external |second |m / 48' / 0' / 1' / 2' / 0 / 1 |- |mainnet |second |p2sh |change |first |m / 48' / 0' / 1' / 3' / 1 / 0 |- |mainnet |second |p2sh |change |second |m / 48' / 1' / 1' / 3' / 1 / 1 |- |testnet |first |p2sh-p2wsh |external |first |m / 48' / 1' / 0' / 1' / 0 / 0 |- |testnet |first |p2wsh |external |second |m / 48' / 1' / 0' / 2' / 0 / 1 |- |testnet |first |p2wsh |change |first |m / 48' / 1' / 0' / 2' / 1 / 0 |- |testnet |first |p2wsh |change |second |m / 48' / 1' / 0' / 2' / 1 / 1 |- |testnet |second |p2wsh |external |first |m / 48' / 1' / 1' / 2' / 0 / 0 |- |testnet |second |p2wsh |external |second |m / 48' / 1' / 1' / 2' / 0 / 1 |- |testnet |second |p2wsh |change |first |m / 48' / 1' / 1' / 2' / 1 / 0 |- |testnet |second |p2wsh |change |second |m / 48' / 1' / 1' / 2' / 1 / 1 |- }| ==Reference== * [[bip-0067.mediawiki|BIP67 - Deterministic Pay-to-script-hash multi-signature addresses through public key sorting]] * [[bip-0032.mediawiki|BIP32 - Hierarchical Deterministic Wallets]] * [[bip-0043.mediawiki|BIP43 - Purpose Field for Deterministic Wallets]] * [[bip-0044.mediawiki|BIP44 - Multi-Account Hierarchy for Deterministic Wallets]]