Avoiding xpub+derivation reuse across wallets, in a UX-friendly manner

The discussion revolves around the challenges and considerations associated with handling extended public keys (xpubs) in relation to the BIP43 standard, which currently does not adequately address privacy concerns or user experience (UX) satisfactorily. The standard's approach promotes the reuse of public keys and necessitates users managing multiple xpubs, leading to a cumbersome UX. Particularly problematic aspects include the requirement for users to synchronize all devices during the creation, rotation, or renewal of wallets, which becomes even more complex when keys are distributed across different individuals or locations. For instance, in a scenario involving a 3 out of 5 scheme where one key is being rotated, obtaining new xpubs from each signing device complicates the process further.

Moreover, the current user interface solutions, such as displaying random numbers or unix time, significantly detract from the UX by introducing confusion among users already overwhelmed by the abundance of random numbers encountered throughout their interaction with the system. From a user perspective, the ideal solution would involve a system where a key or device needs to be added to their software only once. This could potentially be achieved through the use of unhardened derivations to manage different wallets. Despite potential reservations, unhardened derivations are deemed suitable for common use cases and are likely to substantially enhance the overall UX.