There are many more possible combinations and a more general solution was necessary. Output script descriptors make a giant step forward in solving this problem, by providing a language to describe sequences of scripts and the corresponding addresses. For example, a Native Segwit wallet following BIP is described by the following pair of descriptors:.
As long as the language to describe policies is expressive enough, this will work for all the standardized wallet types above, for multi-signature wallets, and potentially for any arbitrarily complex script policy. An example would be any policy expressible in miniscript. On top of descriptors, we built a modified language see documentation here with the following main changes:.
Compactness allows more intuitive human inspection, while splitting the keys allows the hardware wallet to work with potentially a very large number of keys, without having to keep them in its memory. Moreover, this model works better with policies where the same key might be present in multiple sub-policies, which is likely to happen in more complex scripts, and especially in tapscripts.
The advantage is more obvious for multi-signature wallets: a three-of-five native SegWit multi-signature wallet could have the policy template wsh sortedmulti 3, 0, 1, 2, 3, 4 , which is reasonably easy to inspect for a human. Standard single-signature policies can be used straight away.
Any other policy such as policies with external keys or policies using non-standard paths, must be registered on the device first. A policy is registered with a name , which is a short string that identifies the policy to the user. In order to keep the hardware wallet stateless , meaning that your seed is the only information that the device stores, the wallet registration feature is designed in such a way that the client is responsible for its storage.
Yet, care is taken to ensure that a compromised client cannot alter information about a registered policy or otherwise trick the user into signing something they did not intend to sign. Once properly integrated with desktop wallet software, these features allow for the first time the ability to create really secure multisignature setups with Ledger hardware wallets. During the registration flow, the user verifies the name of the policy, the policy itself, and each of the cosigners.
Once approved by the user, the Hardware Wallet returns a byte string, a hmac-sha , which can be used in any future call to provide proof that the policy was already approved.
Alternative registration flows that would allow revocable policies are possible, but at the cost of making the device no longer stateless, which brings other tradeoffs in terms of user experience. After all, one can make a policy effectively useless by moving all the funds controlled by it. The hardware wallet cannot warn the user if different policies are registered under the same name! In order to use a registered wallet safely, it is crucial to be able to derive addresses for the wallet.
The device can show the name of the registered wallet and the derived address on its secure screen:. Spending from a registered wallet has a flow that is exactly the same as for usual single-signature transactions, except that the name of the registered wallet is shown first, and has to be explicitly approved by the user.
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