A Partially Signed Bitcoin Transaction coordinates signing when keys aren't in the same place at the same time.
It turns your transaction into a file you can carry around with blank spots for the signatures.
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When you create a Bitcoin transaction with a hot wallet (like on your phone) it usually gets signed then and there.
But if you use a hardware signer or have a multisig, all the keys might not be at hand - so how do you sign?
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Here comes the PSBT!
It saves some data for your transaction to a file
- which coins
- how much to send
- where it's going
- fee-rate
You hardware signer can load the PSBT and sign
(after you double check the details)
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Where PSBTs really shine is coordinating multiple signers.
PSBTs can be combined, so key holders don't have to sign in any particular order.
Each signs the same basic PSBT which can all be combined later to form a valid transaction.
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Example 1:
A business with a 3 of 3 multisig.
Each key-holder signs remotely, asynchronously.
Accounting combines the PSBTs.
Broadcasts the transaction.
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Example 2:
A coinjoin transaction.
A coordinator creates a collaborative transaction.
Each participant verifies and signs the PSBT.
Coordinator combines and broadcasts whole transaction.
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Liana Wallet loves PSBTs!
There's even a separate PSBT button on our home screen.
If you use Liana Connect, PSBTs for wallets you're part of automatically show up.
We see PSBTs as essential tech for businesses with Bitcoin treasuries.
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History:
@achow101 drafted BIP174 in 2017, which described the PSBT standard.
It was merged into Bitcoin Core v0.17.0 in 2018.
The PSBT standard has seen strong adoption among wallets and is currently supported by most FOSS wallets.
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Resources:
BIP174 (PSBT v0) by @achow101 https://github.com/bitcoin/bips/blob/master/bip-0174.mediawiki
BIP370 (PSBT v2) https://github.com/bitcoin/bips/blob/master/bip-0370.mediawiki
As usual, the @BitcoinOptech page on psbt's is excellent
https://bitcoinops.org/en/topics/psbt/
@river has a good write-up too
https://river.com/learn/what-are-partially-signed-bitcoin-transactions-psbts/
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A PSBT can have more signatures than it needs (a 3-of-5 where all 5 keys sign PSBT)
Sadly there is not much adoption for calling these Overly Signed Bitcoin Transactions.
There's always v2...