What Is a PSBT (Partially Signed Bitcoin Transaction)?
A PSBT (Partially Signed Bitcoin Transaction) is a standardized format (BIP 174) for Bitcoin transactions that allows multiple parties or devices to collaborate on creating and signing a transaction. It's particularly useful for multi-signature wallets, hardware wallets, and complex transaction workflows.
Transaction Workflow
A PSBT moves through stages: Creator (builds transaction structure), Updater (adds UTXO data), Signer (adds signatures), and Finalizer (assembles complete transaction). Each role can be performed by different software or hardware.
Key Use Cases
Multi-Signature Coordination
PSBTs enable multiple signers to independently add their signatures to a transaction without needing to be online simultaneously. Each party can review and sign at their own pace.
Hardware Wallet Integration
Hardware wallets use PSBTs to safely sign transactions created by watch-only wallets. The unsigned PSBT is passed to the hardware device, signed offline, then returned for broadcast.
PSBTs have become the standard for interoperability between Bitcoin wallets and signing devices. They work seamlessly with descriptor wallets and support all address types including SegWit and Taproot.
Quick Facts
- •Defined in BIP174
- •Enables coordination between wallets
- •Essential for hardware wallet workflows
- •Supports multisig and complex scripts