There are two types of multisig outputs available at the moment that are useful for us.

• 1-out-of-3
• 1-out-of-2

While technically I can think of no reason to not support any 1-out-of-n transactions, the reference client won't relay or mine these for now. It also seems then if you use uncompressed public keys they are not valid ECDSA points which means that we are stuck with compress public keys for now until somebody finds a way to use uncompressed ones.  

What this means is that we can use a maximum of 128 bytes per multisig-output (two compressed public keys of 64 bytes each). Since the first public key will always be one of our own public keys so we can redeem the output.

Grazcoin suggested we could use the public key to encode the Bitcoin address of the receiver. However I think this might be more trouble then it's worth. If you convert a Bitcoin address to a hex string you would end up with a 68 byte string. Which is just over the length of one public key. It would make parsing the much harder since you are guaranteed to need two ouputs for every transaction.

I would like to suggest that we keep the original spec and use one output for the receiving address.

We also need to rethink the sequence number. Since we always know what the target address is we no longer have to use a sequence number based on the receiving address and since public keys are kept in order in a multisig output (although I would appreciate if somebody could confirm this) we don't need sequences on a per public key basis, we need them per output.

We can just use a integer that counts up from zero, per multisig output, making sequencing much easier in the new situation.

A simple encoded simple send would look like (and forgive my horrible photoshop skills):



A complete tx could look something like this:


I appreciate some feedback on this spec before I start writing code

https://bitcointalk.org/index.php?topic=265488.msg3164831#msg3164831

I was reading the above post describing efforts to come up with a new Mastercoin tx scheme; there are a lot of issues with the above, in particular misconceptions about how Bitcoin works, as well as missed opportunities to add censorship resistance. In addition there are potential upcoming changes to Bitcoin that could seriously harm your protocol - changes that may end up getting more support than otherwise because they do exactly that.

I'd can create a complete specification taking all these issues into account, including explaining those issues are exactly and what trade-offs (and alternatives) were involved in coming up with the spec. In short I plan to answer the question "How do you implement a blockchain on top of Bitcoin in a robust, low-resource, and censor-proof way?"

If you are interested let me know and we can work out a set of concrete deliverables: specification document, design rational, and (optionally) example code written in Python with python-bitcoinlib implementing the proposed specification. Any contract would be fixed price, no-cure-no-pay, with a third party approved by both parties acting as escrow in a 2-of-3 multisig transaction deciding if I had in fact completed it successfully. Jeff Garzik has done work along these lines in the past (pybond) and may be able to take on that role.