Steemit Crypto Academy // Season 3 week 5 // Homework Post for [@sapwood]

QUESTION 1
What is a multisig wallet? How is it different from a single key wallet? What are the different uses of a multisig wallet.

The Multisig Wallet

Definition

The multisig is an acronym for the multi signature which is a wallet type that required the input of more than one signature too verify a transaction. Most wallets as we know such as the trust wallet, metamask and others are the single key wallet which requires a single key for you to sign a transaction.

The uniqueness of the multisig wallet comes in play with the feature, that it does not only allow all the present keys to must sign a transaction, but a particular number out of the total number of keys can sign a transaction.

Example, in a multisig wallet of 2 of 3 keys, two keys can be used to sign a transaction. In a multisig wallet of 3 of 5 keys, 3 can sign a transaction. Now that was explained in very simple explanation.
In more vivid explanation, in multisig wallet of 3 of 5, where
3 = number of authorization and
5 = number of cosigner
With the signing of 3 signatures, a transaction can be validated.

The Difference of the multisig wallet from a single key wallet.

The multisig wallet comes with in a lot of advancement when compared with the single key wallet in the following ways;

• in the multisig wallet we have more than signature. Meaning we have more than one signature before a transaction can be signed, where as in a single key wallet, all we need is a single key.

• the multisig wallet can be typically used to solved the problems of an enterprise especially when it comes to governance in a partnership system. This is quite different from the single key wallet.

• when comparing to attack of the multisig wallet and the single key wallet, we see that the single key is more prone to attack than the multisig wallet.

The different uses of the multisig wallet.

• The multisig wallet has particular been seen to be more joint accounts, especially when it comes to companies.
  Lets say for a commercial bank it is particular useful such that a given amount or number of users will sign a transaction before validating it for the money to spent. And also in the case of a family account, depending on the setup it means at least a certain amount of users have to sign a transaction before the validation is made.

• the Multisig wallet is also particularly used to increase the security level. This is because of the signing of transactions from more than one signature.

• it is also particular useful in the decision making of enterprises and firms. This brings more descipline as any spendable amount will require a particular or a majority of the members to agree.

QUESTION 2
Download, install and setup 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 cosigner and why?

Downloading and Installation of a Multisig wallet (Electrum)

Giving out in steps forms, I will be explaining how to download and install the multisig wallet.

Step 1:

We go to playstore and an search the electrum wallet and download.

Step 2:

We then open the application and click on the next button and take multisig wallet.

Step 3:

We then arrange to 3 cosigners and required 2 signatures. And click the next button

Step 4:

We then click on create a new seed which I will write down my seed and keep it safely while clicking on the next button. We then reenter the seed.

Step 5:

We then get the master public key which we save. And click on the next button.

Step 6:

We then need to add the other 2 cosigners. Meaning we are doing the same process to get their MPK as above. We click on the enter cosigner key and take the next button which will be for the second cosigner and we get the MPK

Step 7:

We then need to add the 3rd cosigner. Meaning we are doing the same process to get their MPK as above. We click on the enter cosigner key and take the next button which will be for the third cosigner and we get the MPK

Step 8:

We then input a password and confirm it.

Wallet all Ready.

Difference between the seed key and the MPK

Here is how different the seed key is different from the MPK

• we normally as seen above, in the Electrum multisig wallet, we use the seed MPK with the use of the seed key. Meaning we are getting the seed key and it is the most important.

• the seed key is the main key here, meaning that once or if the seed key is compromised, it is easier for the account to be hacked or compromised. This is particularly different from the MPK because if a single key is compromised the wallet will not be able to be hacked. Or better still it will have higher security. This is particular because the infiltrator will need at least two of the 3 MPK in the case of the account I created above.

• in this regard, while keeping the all the keys very safe, the seed key should be kept in total secret.

Reason I will not share my Seed Key

Reason is quite simple here, we have already learnt how important the seed key is, and once the seed key enters into the wrong hands the account is compromised because it can be used to generate the other MPK.
Meaning that the seed key should never be shared.

QUESTION 3
How many different “m of n” combinations multisig wallet you can construct in electrum? How do you export your seed and private key in a multisig wallet.

The different m of n combinations in electrum multisig wallet.

I found out the m of n combination varies from one device to another. That is the m of n combination when using a computer is different from that when using the mobile device.

Well, as the question entails the different m of n combination in the electrum multisig wallet I created isa maximum of 4 0f 5
Meaning we have a maximum of 5 cosigners and 4 signatures.

Exporting the seed and Private key in the Multisig wallet.

Listing out in steps just as done above, I will explain the different steps in exporting the seed and private key in the multisig wallet with the electrum wallet as example.

step 1

We begin by clicking in the wallet icon on the home page of the wallet.

step 2

We then see the seed key and then MPK displayed, we then click on export backup

^{And we are done.}

QUESTION 4
Perform a real transaction to another address using a 2 of 3 multisig wallet.

Performing a Real Transaction.

To begin, we have to create standard wallet where we will fund the account.

step 1

Creating a standard wallet, we click on the 3 parallel lines which is the menu button and take new wallet.
We then enter the wallet name and select standard wallet.
We use standard wallet to fund the account.

step 2

We now need to send to the btc from the standard wallet to the multisig wallet.
This is achieved by entering the standard wallet and clicking on the send button where we input the address of the multisig wallet and thee amount. And confirming payment by clicking okay.

step 3

To begin with the transaction now, since we have the btc in the multisig wallet, we click on the send option and input the amount and the recipients address. The description is optional.

We then click on the pay button and take finalize. After that we click on export and take export file.

We now to sign with the second cosigner.
For the second, we click on tools and take load transaction from file. Here we take the sign option and input password, then click on the broadcast button.

QUESTION 5
What is the difference between receiving address and change address? Demonstrate your experience with a change address.

Difference between the receiving address and the change address

I explanation vividly, the receiving address has the capacity to complete and initiate transaction actually this is done without any form of unspent transaction output.
In the change address, the addresses are unspent transaction output.

Now According to the Bitcoin Protocol; on Non Partial Spending.
Lets say the amount transferred to the receipt is relatively low than the initial amount in the receive address, the whole value in the receiver address will be spent while keeping any balance for a new or another utilization purposely as a change address.

Demonstrating Experience,
My transaction is 0.3mbtc and i sent 0.2mbtc; and all my receiving address value is 0.2mbtc has to be spent first fully since i cannot partially spend it.

Work done by me @doctor23

CC:
@sapwood