Multisig - How to restore 2of3 when 1 key is lost

[JorisK]

Hi,

Situation: I have a 2of3 multisig setup using Electrum, I printed every seed on a piece of paper and put every paper in a different location. I remove all Electrum installations/wallets so all I have left is 3 papers with each of them one seed.

What happens: Location 3 burns down, only two seeds left in different locations. I now want to move my BTC to a new wallet.


To recover, I need to move my BTC using two signatures, so the idea is to set up two wallets 1 and 2 which information I still have, and move my BTC to a new wallet.

Wallet 1:
- I start Electrum
- I enter my 1st seed which I have, continue...
- I enter the 2nd cosigner xpub key which I have, continue....
- It asks my for the 3rd cosigner key.... the one that went up in flames.......

And here i'm stuck.........

This is not a real situation i'm having here, just drawing one because I'm interrested in using multisig, but want to know 100% sure i'm able to recover in case of emergency.

Can anyone here tell me what to do in this situation?


 

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[JorisK]

Ah.... apparently I forgot to activate 80% of my brain when I was posting this... let me try to answer my own question:


ANSWER: in the situation above I would have been lost.

SOLUTION: On each site, place ONE seed and ALL xpub keys (me assuming that you can generate a xpub key from a seed, but not the other way around), like this:



Can any guru confirm I got this right?

[TryNinja]

Can any guru confirm I got this right?

That should work.

Or if you already have the watch-only wallet - created from the 3 xpubs (and which can create the raw transaction) - all you would need is 2 of the 3 wallets to sign the transaction. The 3 xpubs in each location are useful if you want to re-create the watch-only wallet. Then, create the raw transaction from it and later sign it with 2 keys.

[JorisK]

Can any guru confirm I got this right?

That should work.

Or if you already have the watch-only wallet - created from the 3 xpubs (and which can create the raw transaction) - all you would need is 2 of the 3 wallets to sign the transaction. The 3 xpubs in each location are useful if you want to re-create the watch-only wallet. Then, create the raw transaction from it and later sign it with 2 keys.

Thanks Tryninja,

So my assumption that a xpub key can be generated from a seed, but not the other way around (generate seed from xpub) is correct?

[TryNinja]

Thanks Tryninja,

So my assumption that a xpub key can be generated from a seed, but not the other way around (generate seed from xpub) is correct?

Yes. To spend the coins, you'll need to have all 3 xpubs (regardless of which 2 parts you use to sign). That's why you either need to put all 3 seeds in each location (which would make the whole multisig scheme useless, so it's not an option) OR all 3 xpubs in each location. All the xpubs gives to the one with access to it is the watch-only wallet, so that's not a security issue.

Your image above is correct.