Multisig is NOT fault tolerant:
In a 2 of 3 multisig wallet (for example), to sign a transaction, you need 2 of the 3 private keys, but ALL 3 PUBLIC KEYS.
If you loose one of the 3 seed phrases and haven’t backed up the XPUB’s, you won't be able to reconstruct your wallet if you need to.
You will therefore loose access to your funds.
Important stuff
it's probably good practice to make a digital backup of the coordinator (e.g. sparrow) and keep it in multiple redundant locations. it can be encrypted to improve privacy if one is worried about a 3rd person gaining access to it
sparrow can also export the coordinator config as a printable pdf in case you want a hard copy to store with each SK. Seedhammer is a good option too if you're very paranoid about loss.
Thanks I didn’t know about the printable PDF option. That’s a nice feature.
Andreas said this in a video a few years ago, but I disagree.
1) You can keep the output descriptor with each key. You are unlikely to use 2-of-3 of these copies.
2) You can combine multisig with Seed XOR(2-of-2). Ideally, each key would be in steel it requires each key to have part a or b of each other key. You should also have the extra word, but I am not sure it's necessary.
This is better from a privacy perspective because if one key is comprised, the thief has no way of knowing how much bitcoin you have.
Here is how it would work:
It’s so much more pleasant on NOSTR than X 😂
If you stored your xpubs with each seed and you lost 1, couldn’t you just configure a new Multisig and with the 2 private keys, send btc to your newly configured wallet? It’s rather annoying, but no loss of funds.
The multisig address is a hash of all 3 extended public keys.
If you don’t have these, you can’t recreate the wallet.
If you lost one seed phrase, but had all 3 XPUBs you would be able to recreate the wallet.
I follow you there. At that point you still have access to your funds. Maybe I’m misunderstanding, but you configure an entirely new multi sig Wallet with 3 new xpubs, yeah? I see your point, you no longer can recover your wallet which is annoying for several reasons. However, no loss of funds from losing any of the 3 xpubs is my understanding. I certainly could be wrong or misunderstanding the situation.
Oh ffs! thank you mike my heart just sank. Time to revisit my options
Few months ago, to experiment I foolishly created a 1 of 2 multisig using the same wallet but different 2 XPUBs (Legacy & Taproot).
Sent bitcoin to the multi-sig but now the wallet won't sign any transaction. I guess I should have used 2 or 3 distinctly different wallet instead of the same one.
