I will look into adding this to Litecoin. Gavin, what are the gotchas? Is there a possibility of a chain fork from this change? And what I should I pay attention to when testing this on the testnet. And let me know if you want to help test it.
See BIP 12, the Backwards Compatibility section, for gotchas-- block chain forks are possible if you're not careful. They won't happen by accident, but if you assume there is an attacker that just wants to cause inconvenience by forking the chain then you have to roll-out the change carefully.To test on testnet:
Apply the patch. Then use the extended 'validateaddress' RPC command that is part of the patch to get public keys for several of your bitcoin addresses (use getnewaddress to generate new ones if you need to).
Combine those public keys into multi-signature addresses using the new addmultisig RPC command:
addmultisigaddress <nrequired> <'["key","key"]'> [account]
So for a 2-of-3 escrow you'd call:
addmultisigaddress 2 '["...pkey1...","...pkey2...","...pkey3..."]'
It returns a multisignature bitcoin address.
You'd do that on all the machines involved in the escrow transaction.
To fund that multisignature address, you just use the normal sendtoaddress (or sendmany or sendfrom) RPC commands, using the address returned from addmultisigaddress.
To spend those funds... more patches are needed. You CAN actually spend them if you have ALL the private keys in your wallet; if you do, then the multisignature transaction is treated just like any other transaction you've received, and will show up as part of your wallet's balance, in listtransactions output, etc.
Modifying the patch so that you can spend them if you have <nrequired> keys is probably the right thing to do, although the security implications of that for shared-wallet providers needs to be carefully thought through. And in almost all of the real multisignature use cases, a RPC calls to create and sign partially-signed transactions is the right thing to do, NOT importing private keys from the other people involved in the transaction. See: https://gist.github.com/1321518 and https://bitcointalk.org/index.php?topic=39471.msg597785#msg597785 for a proposal on how to do that.