What's PSBT for wallets?

PSBT empowers wallets with secure offline transaction signing, multi-signature support, and seamless hardware wallet integration.

Feb 06, 2025 at 07:12 am

What is PSBT for Wallets?

Key Points:

• PSBT is a standardized protocol for partially signed Bitcoin transactions.
• It allows multiple parties to collaboratively sign a transaction without revealing their private keys.
• Wallets that support PSBT can securely sign and send transactions even if the source wallet is offline.
• PSBT facilitates offline transaction signing, multi-signature setups, and hardware wallet integration.

Detailed Explanation:

1. Introduction to PSBT

Partially Signed Bitcoin Transaction (PSBT) is a technical standard that enables the secure and collaborative signing of Bitcoin transactions. It allows multiple parties, known as signers, to contribute their signatures to a transaction without compromising the security of their private keys.

2. How PSBT Works

A PSBT consists of the following elements:

• The raw, unsigned Bitcoin transaction.
• The signature data from each signer.
• A flag indicating which signers have already signed.

The PSBT is passed among signers, who add their signatures without needing to know the private keys of other signers. Once all signers have contributed their signatures, the PSBT can be finalized and broadcast to the Bitcoin network for processing.

3. Benefits of PSBT for Wallets

PSBT brings several benefits to wallets, including:

• Offline Transaction Signing: Wallets that support PSBT can sign transactions even when the source wallet is offline. This enhances security by preventing attackers from accessing private keys stored on the wallet.
• Multi-Signature Support: PSBT facilitates multi-signature setups, where multiple signers are required to approve a transaction. This provides additional layers of security for high-value transactions.
• Hardware Wallet Integration: PSBT enables easy integration with hardware wallets, allowing users to sign transactions securely without exposing their private keys to the software wallet.

4. How to Use PSBT with Wallets

Using PSBT with wallets involves the following steps:

• Generate a PSBT from the wallet.
• Share the PSBT with other signers.
• Signers add their signatures and return the updated PSBT.
• Finalize the PSBT by combining all signatures.
• Broadcast the final PSBT to the Bitcoin network.

5. Security Considerations with PSBT

While PSBT enables secure transaction signing, it is crucial to maintain good security practices:

• Ensure that the PSBT is only shared with trusted signers.
• Use strong passphrases and store them securely.
• Avoid signing PSBTs from untrusted sources.

FAQs:

Q: What are the top wallets that support PSBT?

A: Top wallets that support PSBT include:

• Electrum
• Bitcoin Core
• Wasabi Wallet
• BlueWallet
• Sparrow Wallet

Q: How can I export a PSBT from my wallet?

A: The steps to export a PSBT vary depending on the wallet you are using. Generally, you can find the export option under the "Transaction" or "Send" tab.

Q: What is the difference between PSBT and RBF?

A: PSBT is a protocol for partially signing Bitcoin transactions, while RBF (Replace-By-Fee) is a mechanism for replacing an unconfirmed transaction with a new one with a higher fee. PSBT facilitates secure multi-signature setups, while RBF is used to expedite transaction confirmation.