First, I would like to thank ThomasV for his excellent work.

I am a relatively new user to Bitcoin. One of the aspects of Bitcoin I am exploring is multisig. I think this is an important feature that, with a little added simplicity, would go a long way toward an easier path for more widespread adoption. One of the scarier aspects of bitcoin is there is no recourse. After hitting a bit of a wall and being frustrated I have been looking kind of leisurely for the last few weeks to get multisig to work and make sense when today I came across this post.

This is not the way you are supposed to create a multisig wallet.
You need to create two multisig wallets files, A and B, where A has the xpub of B, and B has the xpub of A
See the doc here: https://electrum.orain.org/wiki/Multisig_Wallets

Before you do anything else, you need to recover the coins you sent to the 2 of 2 wallet you created.
For this, create a new wallet file, select 'restore' and 'multisig 2of2'
Then enter the two seeds in the dialog box. (the seed of the standard wallet, and the seed of the 2of2 wallet you just created)

please report back here.
it may be that the multisig wallet creation procedure is too difficult for most people.
in any case I think we will have to improve it.

Great information and this gave me some ideas. But for the less informed user like myself there are things I don't understand about the blockchain and the inner workings of Electrum which probably means my ideas won't or can't work but would make things much easier. The first piece that is confusing is why do I need to create a second wallet and all the other steps on my computer when I want to create a multisig transaction with someone else?

After reading the post by ThomasV and digging a bit it looks like multisig works in kind of the same way that PGP works. You need to download someone's personal key so that you can create a message that only they understand. That is a pretty good parallel to how multisig seems to work except multisig has an additional step to 'make the message worthwhile'. So there are two steps. Both parties need to work together to create a public message and then both need to sign the message saying the message is agreed upon. 2/3 works the same way just adding a third person but only needing to have 2 out of the 3 agreeing that the message is good.

That leads to my questions and things I'm probably missing. In Electrum under the 'Wallet' drop down there is a way to get the Master Public Key. For Bob and Alice to create a 2/2 multisig transaction Bob would need to give Alice his public key and get her public key. It would be nice if there was another dropdown to 'Import Public Key' which could store a public key and just be another tab next to invoices that shows all my friends (or businesses) keys that I am able to enter into a multisig transaction with. It seems that a bit of obfuscation can be done and could work with just an address if handled by a server.

They exchange keys. Bob creates his part of the transaction with Alice's key on his machine. Bob would then uploaded his half to the Cosigner Pool server. Alice would get a notification the same way she is currently notified of a transaction except she needs to acknowledge it and she can only do this because she has Bob's key. Once acknowledged those coins are moved to a third wallet then verified awaiting both Bob and Alice's signatures. Alice now feels good that Bob has 'put into escrow' a deposit for Alice's services and she begins her work.

Bob is now satisfied that Alice has completed the work then signs the message. There could be two sets of buttons. 'Send to Alice' or 'Accept Refund' for Bob and 'Accept' or 'Refund' for Alice. If the transaction was 2/3 the third person would have a set of buttons 'Send to Bob' and 'Send to Alice'.

My questions are, as of now where does this current multisig transaction live after creation but before finalization? Is a third wallet created? Is it part of the blockchain handled by the bitcoind protocol? It's always easy to a user and I don't expect it to be easy but how much work is that to implement? Is the infrastructure there? Does anyone have an easier way to complete a multisig transaction?

~