New Bitcoin proposal rescues locked multisig wallets – At a hidden cost
Summary
Bitcoin BIP138, merged into the proposals repository as a Draft, specifies an encrypted backup for wallet descriptors, policies and other recovery metadata that seed phrases may not restore—especially in multisig and miniscript wallets. Private keys are excluded. An eligible extended public key (xpub) can decrypt the backup without a seed, revealing wallet structure but not granting signing ability. The draft limits which public keys can serve as recovery keys, but warns that a service already holding a reused eligible xpub could read the backup if it obtained a copy. A Rust implementation exists, while Liana’s earlier backup format is incompatible. The proposal’s publication does not change Bitcoin itself or guarantee wallet support.
