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If I were to create a 2-of-4 multi-sig wallet using the 3 seed phrases of an existing 2-of-3 wallet, plus a new seed phrase that I instantly destroy, would I then effectively have a new completely independent 2-of-3 (technically 2-of-4) multi-sig wallet that uses the same seed phrases as the existing wallet?

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You would have to transfer any funds from the 2-of-3 multisig address to the 2-of-4 multisig address on the blockchain. But yes you could do this. I don't know why you would do this! Assuming the 2-of-3 can be spent using 2 of the 3 private keys (A, B and C) the 2-of-4 can also be spent using 2 of the 3 private keys because you threw away the fourth. Maybe to obfuscate the fact you are using a 2-of-3 on the blockchain? The potential benefits of doing this are minimal if not zero.

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    One possible reason would be if you had securely created, stored and backed up your existing seeds for a wallet containing bitcoin from a KYC exchange, but wanted to start accumulating non-KYC bitcoin in a new wallet while avoiding having to manage new seeds..
    – evo_race
    Commented Dec 11, 2022 at 11:43
  • @evo_race: Ah ok, fair enough. Yeah it would be a different address but function exactly the same. If you spent from both addresses you would leak the fact that they were both using the same public keys. I don't know if a KYC exchange would notice. But while you haven't spent from the 2-of-4 address the public keys wouldn't be visible on the blockchain. Commented Dec 11, 2022 at 11:50
  • Thanks - I didn't appreciate that the wallets could be linked on the blockchain through their public keys.
    – evo_race
    Commented Dec 11, 2022 at 11:53
  • Addresses can be linked once you've spent from them. Kinda fits into the address reuse thing. It isn't clear it is a multisig, it is a 2-of-4 multisig or what pubkeys it is using until you spend from that address when all of that is revealed. Commented Dec 11, 2022 at 12:00
  • Taproot and things like MuSig2, FROST improves on this. Commented Dec 11, 2022 at 12:05

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