[bitcoin-dev] Signature and Script Independent Hierarchy for Deterministic Wallets.

[SomberNight]

See some replies inline. (quoted text from BIP draft)

> Date: Sun, 14 Mar 2021 01:51:15 +0000
> From: Robert Spigler <RobertSpigler at protonmail.ch>
> Subject: [bitcoin-dev] Signature and Script Independent Hierarchy for Deterministic Wallets.

> There are many issues with the current standards. As background, BIP 44/49/84 specifies:
> `m / purpose' / coin_type' / account' / change / address_index`
> where the BIP43 `purpose'` path is separate for each script (P2PKH, P2WPKH-in-P2SH, and P2WPKH respectively).  However, these per-script derivations are made redundant with descriptors

> We should not be mixing keys and scripts in the same layer. The wallet should create extended private/public keys independent of the script or signature type

You say that keys and scripts should not be mixed in the same layer, and imply that this was solely done due to these standards predating output script descriptors. Even if this was the case, it is not the only reason for doing it. BIP44/49/84 mixing scripts and keys in the same layer makes recovery from seed/mnemonic much easier.
Note the significant overlap between the authors of BIP39 and BIP44. I am fairly certain BIP44 was designed with recovering from a BIP39 seed (and no additional information backed up) in mind. Note the "Account discovery" section of BIP44.
(Electrum seeds go even further, as such seeds contain a version number that encodes both the script type and the key derivation path to use.)

> We define the following 5 levels in the BIP32 path:
> `m / purpose' / coin_type' / account' / change / address_index`

> [Account]
> It is crucial that this level is increased for each new wallet joined or private/public keys created; for both privacy and cryptographic purposes.
> For example, in multisignature wallets, before sending a new key record to a coordinator, the wallet must increment the `account'` level.  Before creating it's own single signature wallet, the `account'` level must again be incremented.

Imagine a user who has a BIP39 (or similar) seed. Even today, recovering most non-singlesig scripts from that is obviously infeasible. However, all singlesig scripts at least can be discovered if the keys are using the suggested derivation paths.
By trying to create a standard that mixes discoverable and non-discoverable scripts in the same derivation scheme and incrementing a single index, you are turning all scripts into being non-discoverable.
Note that even if a user only used singlesig scripts and followed this proposal, during recovery from seed the wallet would have to check all script types for all account indices (which is only ever going to get more expensive as new script types come).
The workaround and I imagine your suggested solution is clearly to backup both seed words and output script descriptors; and to keep appending new output script descriptors to existing backups when the account index is incremented. While much less user-friendly than backing up just a seed, it is more generic and extendable.

My point is simply that your proposal is making a tradeoff here. The tradeoff itself seems easy to miss on first read of the text, so I just wanted to explicitly point it out for the record.

ghost43 / SomberNight