My name is Zach and I'm a Bitcoin enthusiast interested in improving wallet usability and security. I'm writing to propose a new Bitcoin Improvement Proposal (BIP) and seek initial feedback before submitting a formal draft via GitHub pull request.

The proposal builds on BIP-39 by introducing a compressed representation of mnemonic phrases using Base58 encoding, reducing a 12-word mnemonic to 24 characters. It also includes an optional extension for multisig setups (e.g., 2-of-3), where each participant's storage combines their compressed mnemonic with foreign xpubs and a checksum into a ~252-character Base58 string. This aims to facilitate secure, distributed storage in space-constrained scenarios like physical backups or QR codes.

Below is a draft of the BIP in plain text format for review. I've followed the structure from BIP-2 but haven't assigned a number yet. If the community finds this idea promising, I'll convert it to MediaWiki and submit it to the bitcoin/bips repo.

This BIP proposes a method to compress BIP-39 mnemonic phrases by mapping each word in the standard 2048-word English wordlist to a unique two-character string using Base58 encoding. This reduces a typical 12-word mnemonic (approximately 59 characters including spaces) to a compact 24-character string without spaces. The encoding is deterministic, reversible, and leverages the existing BIP-39 word indices, ensuring compatibility with current seed generation practices.

Additionally, this BIP introduces an optional extension for multi-signature (multisig) setups, particularly m-of-n schemes like 2-of-3. In such scenarios, each participant's location stores their local compressed mnemonic alongside the extended public keys (xpubs) from the other participants. These components are concatenated into a single Base58 string with a checksum for integrity, resulting in a ~252-character string per location. This facilitates secure, distributed storage while enabling independent address derivation at each site.

This can aid in easier storage, transmission, and input of mnemonics and multisig data in space-constrained environments, such as physical etchings or QR codes, while maintaining security.

Motivation

BIP-39 mnemonics are human-readable but verbose. Compressing them to 24 characters for 12 words reduces overhead significantly. In multisig contexts, such as a 2-of-3 scheme with geographically distributed participants, each location must store foreign xpubs to derive shared addresses, but private mnemonics remain isolated. Concatenating the compressed mnemonic with xpubs and a checksum creates a compact, verifiable dataset (~252 characters), and supports error detection during transcription or recovery.

This does not replace BIP-39 or existing multisig standards (e.g., BIP-45 for derivation paths) but provides an optional compressed representation and storage format.

Specification

Base58 Alphabet

123456789ABCDEFGHJKLMNPQRSTUVWXYZabcdefghijkmnopqrstuvwxyz

Word Index Mapping and Encoding/Decoding

The BIP-39 English wordlist is sorted alphabetically, assigning indices from 0 ("abandon") to 2047 ("zoo"). The full wordlist is defined in BIP-39 and remains unchanged.

For a word with index i (0 ≤ i ≤ 2047):

Compute high = i // 58 (integer division, range 0-35 for i ≤ 2047)
Compute low = i % 58 (range 0-57)
The two-character code is alphabet[high] + alphabet[low] (big-endian order, higher digit first)

Examples:

i=0 ("abandon"): "11"
i=2047 ("zoo"): "PJ"

Compressing a mnemonic: Look up indices, encode each to 2 chars, concatenate (24 chars for 12 words).

Decompressing: Split into 2-char chunks, decode indices, look up words, verify checksum.

Multisig Storage Format (Extension)

Assumes 12-word mnemonics, 111-char xpubs.

Structure: Compressed mnemonic (24 chars) + Sorted foreign xpub1 (111) + xpub2 (111) + Checksum (6 chars) = 252 chars.

Checksum: Double-SHA256 of decoded data bytes, first 4 bytes encoded to Base58, padded to 6 chars with '1's.

Verification: Extract parts, recompute checksum, validate.

Usage in 2-of-3: Each location stores local compressed + 2 foreign xpubs + checksum.

Rationale

58^2 = 3364 > 2048 for unique codes.
Concatenation leverages Base58 for compactness.
Fixed lengths for easy parsing.

Backwards Compatibility

Fully compatible; optional extension.

Reference Implementation

Full Python reference implementation available upon request or in the formal submission.

Test Vectors

Compressed mnemonic: "1112131415161718191A1B1C" (first 6 words, extend to 24 chars for full).
xpub1: "xpub661MyMwAqRbcFtXgS5sYJABqqG9YLmC4Q1Rdap9gSE8NqtwybGhePY2gZ29ESFjqJoCu1Rupje8YtGqsefD265TMg7usUDFdp6W1EGMcet8" (111 chars).
xpub2: "xpub68Gmy5EdvgibQVbouHdFqKg4ZP5oVjJeJUP7yKS4xEM2it2c8EL3MEN8WC4PTEiGK8oFUaKUV4ndBKSp53Q6fFi8DwhsBS1Lxf4H9fwnK2" (111 chars).
Sorted: xpub1, xpub2 (assuming lex order).
Data str: "1112131415161718191A1B1C" + xpub1 + xpub2 (246 chars, but use full 24-char compressed in practice).
Checksum: Compute as per code (will be 6 chars, e.g., "2AbCdE").
Full storage: Data str + checksum (252 chars).

Acknowledgements

BIP-39 authors for the foundational wordlist.
Bitcoin community for Base58 standards.
Multisig distribution insights.

I'd appreciate any feedback on this draft: Is the concept sound? Are there similar existing proposals I'm unaware of? Suggestions for improvements, such as in the checksum method or generalization to other word counts/m-n schemes?

If there's interest, I'll proceed with the GitHub submission after incorporating comments.

Thank you very much for your attention to this matter and any insights!

Best regards, Zach corneliusamadeusacts10@gmail.com