> BIP 32 already specifies how to use the first three tree levels:  M/i/j/k,
> i~wallet, j~Internal/External, k~address.  The first level is actually
> type-1 derived, and thus we cannot create an arbitrary number of them
> without pre-computing them from the offline wallet.  So it's not "free" to
> create new wallets unless we redefine how the levels work.

Initially I was thinking that you would share the public key and chain code
from [m/i'/0] so that you can receive payments at [m/i'/0/k], for a unique
value of 'i' for each receive chain.

For the case of generating new receive chains from a *watch-only* wallet, as
you say, the options are to either keep a cache of PubKey/ChainCode for
unused [m/i'] or simply increment 'j' past 1 for an existing [m/i'/j] -- the
concept of 'internal/'external' and change addresses at Depth=2 don't make
sense for handing out receive chains to lots of people anyway, and certainly
BIP32 doesn't *require* 0 <= j <= 1.  So I think incrementing 'j' is the way
to go here...

The "default" layout of BIP32 does NOT mean that implementations should not
check for transactions with j > 1. That would be a useless constraint and
obviously self-limiting. It might be helpful to add to the 'Compatibility'
section some minimum expectations about how a wallet should be 'probed' when
imported. If you don't feel completely free to monotonically increment 'j'
to your hearts content to achieve major usability benefits, then I say BIP32
could use some clarifying.

BTW - the spec calls for addition not multiplication now, so we should call
it the 'Addend' not the 'Multiplier' :-)

> Do these extra wallet chains behave as different wallets, or sub-wallets?

They could, but they certainly don't need to!  A single-wallet
implementation treats this merely as an address-generation algorithm, and
does not expose any hierarchy to the user interface.  The user just
“magically” gets the ability to send multiple payments to their contacts
without immediately sacrificing their privacy
(http://www.wired.com/wiredenterprise/2013/06/bitcoin_retai/). Everything
goes into the same ledger, balance, coin pool, etc. Most of the code base is
unaware BIP32 is even in use.

While it is *possible* to support separate ledgers, balances, etc. it is
certainly not required, and you get all the benefits either way.

I think, since your proposal generates and receives payments into
BIP32-style addresses, we both need similar underlying wallet code. The only
difference is that you are passing the Kpar for [m/i'/0/k] and the *result*
of CKD'((Kpar, cpar), k), and instead I proposed passing Kpar and cpar, and
leaving 'k' out of it, letting the receive choose 'k'.

> For instance, maybe there's a benefit to using the same parent pubkey

> across multiple services, as a form of identity.   If I don't want that, I

> use your method.  If I do want that, I use my method.

I think it's a interesting idea using static public keys as a means for
persistent identity and hence security from MitM. If you want a shared
public key across multiple services we could just combine both ideas and get
all the benefits, by making the data structure { ParentPubKey, Addend,
ChainCode }:

   ParentPubKey: Public key of m/i' -- 33 bytes
   Addend: I[L]*G from CDK'(m/i', j) -- 33 bytes
   ChainCode: I[R] from CDK'(m/i', j) -- 32 bytes

All that remains secret is the ChainCode from [m/i'] -- and of course the
private keys.  The ParentPubKey is a common value across multiple services,
corresponding to user's identity rooted in [m/i'].  Each service gets their
own 'j'.  ParentPubKey + Addend gives you the PubKey of [m/i'/j].  With the
ChainCode, the receiver then can generate [m/i'/j/k] for monotonically
increasing 'k'. Again, from the user perspective all transactions under
[m/i'] can be presented in a single ledger, or not.

Anyway, fundamentally my feedback is if you are designing for persistent
long-term relationships, you could build in a mechanism for generating
address chains so you don't need any further communication after the initial
exchange, and it need not complicate the wallet.

Thanks,
--Jeremy



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