Innovative Bitcoin Proposal: Enhancing Privacy in Collaborative Custody
Introducing a groundbreaking initiative within the Bitcoin community, a new proposal titled “Chain Code Delegation for Private Collaborative Custody” aims to address a persistent privacy issue in multisig collaborations that depend on shared extended public keys. This proposal, crafted by the innovative minds at Bitkey and their partners, seeks to redefine privacy boundaries in Bitcoin transactions.
Understanding the Proposal: A Leap Towards Enhanced Bitcoin Privacy
The core of the privacy challenge is well recognized among wallet developers and custodial entities. In conventional collaborative or assisted multisig setups, cosigners receive an xpub in conjunction with a chain code. This allows them to derive addresses within a user’s wallet deterministically and, by inspecting the blockchain, deduce balances and transaction flows.
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Bitkey’s approach sheds light on this issue, stating that sharing a key with a third party has “traditionally meant granting that party visibility into a user’s wallet balance and transaction history.” The proposed method, however, strives to “eliminate that compromise” by withholding chain codes and only revealing essential information during a transaction.
The Mechanics of the New BIP
The proposed BIP articulates a shift in trust parameters: “We introduce a new BIP for Chain Code Delegation, a collaborative custody technique where privileged entities withhold BIP32 chain codes from non-privileged participants, sharing only necessary data for signature provision.” In this non-blinded process, “the delegatee obtains a per-spend scalar tweak from the concealed chain code, while the delegator computes the child key and generates a standard signature over the transaction’s sighash.” The blinded variant incorporates Schnorr blind signing, ensuring the cosigner remains unaware of the final message yet enforces the per-spend tweak, leveraging Schnorr’s linearity for precision.
This method restricts what cosigners can access and when they can access it. Instead of limitless, universal observability over all derived addresses, cosigners only access per-spend data as needed. Bitkey explains that cosigners can assist with recovery or spending policies “without gaining insights into unrelated transactions or total balances.”
Potential Impact and Adoption
If widely embraced, this paradigm could make collaborative custody wallets as private as DIY multisig solutions while retaining the operational advantages that have made assisted models appealing to mainstream and enterprise users. The proposal has been nurtured in public forums, with discussions highlighting additional benefits beyond privacy: reducing the “security blast radius” since, without chain codes or undisclosed tweaks, a custodian’s key is unspendable for UTXOs they haven’t been explicitly assigned. These discussions also emphasize the importance of revealing minimal information at the moment of spending, just prior to output consumption. This discourse anticipated the current BIP, providing valuable context for reviewers tracking the proposal’s evolution through feedback.
Bitkey’s Commitment to Innovation
Bitkey is poised to lead the implementation of this standard once it is thoroughly reviewed. “Bitkey intends to be the pioneer in deploying Chain Code Delegation in real-world applications,” the company declared, emphasizing that it will facilitate “a private collaborative wallet—a capability previously unattainable.” The goal is to establish an “open, community-endorsed standard that any wallet or custody provider can adopt,” rather than a vendor-specific feature.
Industry leaders have amplified the announcement on social platforms. Jack Dorsey, principal executive officer and chairman of Block, Inc., commended Bitkey’s dedication to advancing privacy enhancements from product to protocol.
Market Context
As of the latest reports, Bitcoin is trading at $111,398, showcasing its dynamic nature and the ongoing interest in its potential. The market continues to face fluctuations, with technical indicators such as the EMA20 and EMA50 playing crucial roles in market analysis.
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