PSBT

A PSBT is a container for a Bitcoin transaction that is not yet complete. A wallet builds the transaction with the inputs and outputs it wants, saves it as a PSBT, and hands it to a signer. Often the signer is an offline hardware wallet or another co-signer in a multisig group. The signer reviews the transaction, adds its signatures, and passes the PSBT back. Once every required signature is in place, any tool can finalize the PSBT into a normal transaction and broadcast it.

The format, defined in BIP 174 and extended for taproot in BIP 370, carries all the extra data a signer needs to sign safely without trusting the machine that assembled the transaction: previous output scripts, key derivation paths, taproot tree information, and so on. Each step of the workflow only adds to the PSBT, so multiple devices and parties can cooperate on a single transaction without any one of them needing the full picture.

PSBT is the common signing surface for almost every modern Bitcoin wallet, hardware wallet, and coordinator. Two wallets that speak PSBT can cooperate on multisig, coinjoins, or dual-funded channel opens without any custom integration between them.

References

• BIP 174
• BIP 370
• Bitcoin Core PSBT docs
• rust-bitcoin PSBT module
• Bitcoin Optech: PSBTs