CS120: Bitcoin for Developers I

Multisignature scripts set a condition where N public keys are recorded in the script and at least M of those must provide signatures to unlock the funds. This is also known as an M-of-N scheme, where N is the total number of keys and M is the threshold of signatures required for validation. For example, a 2-of-3 multisignature is one where three public keys are listed as potential signers and at least two of those must be used to create signatures for a valid transaction to spend the funds.

At this time, standard multisignature scripts are limited to at most 3 listed public keys, meaning you can do anything from a 1-of-1 to a 3-of-3 multisignature or any combination within that range. The limitation to 3 listed keys might be lifted by the time this book is published, so check the IsStandard() function to see what is currently accepted by the network. Note that the limit of 3 keys applies only to standard (also known as "bare") multisignature scripts, not to multisignature scripts wrapped in a Pay-to-Script-Hash (P2SH) script. P2SH multisignature scripts are limited to 15 keys, allowing for up to 15-of-15 multisignature. This limitation is also imposed by the IsStandard() function. We will learn about P2SH in Pay-to-Script-Hash (P2SH).

The general form of a locking script setting an M-of-N multisignature condition is:

M <PublicKey1><PublicKey2>... N CHECKMULTISIG

where N is the total number of listed public keys and M is the threshold of required signatures to spend the output.

A locking script setting a 2-of-3 multisignature condition looks like this:

2<PublicKey A><PublicKey B><PublicKey C>3 CHECKMULTISIG

The preceding locking script can be satisfied with an unlocking script containing any combination of two signatures from the private keys corresponding to the three listed public keys:

<SignatureB><SignatureC>

The two scripts together would form the combined validation script:

<SignatureB><SignatureC> 2 <PublicKeyA><PublicKeyB><PublicKeyC> 3 CHECKMULTISIG

When executed, this combined script will evaluate to TRUE if, and only if, the unlocking script matches the conditions set by the locking script. In this case, the condition is whether the unlocking script has a valid signature from the two private keys that correspond to two of the three public keys set as an encumbrance.