PSBT Howto for Bitcoin Core

Since Bitcoin Core 0.17, an RPC interface exists for Partially Signed Bitcoin Transactions (PSBTs, as specified in BIP 174).

This document describes the overall workflow for producing signed transactions through the use of PSBT, and the specific RPC commands used in typical scenarios.

PSBT in general

PSBT is an interchange format for Bitcoin transactions that are not fully signed yet, together with relevant metadata to help entities work towards signing it. It is intended to simplify workflows where multiple parties need to cooperate to produce a transaction. Examples include hardware wallets, multisig setups, and CoinJoin transactions.

Overall workflow

Overall, the construction of a fully signed Bitcoin transaction goes through the following steps:

• A Creator proposes a particular transaction to be created. They construct a PSBT that contains certain inputs and outputs, but no additional metadata.
• For each input, an Updater adds information about the UTXOs being spent by the transaction to the PSBT. They also add information about the scripts and public keys involved in each of the inputs (and possibly outputs) of the PSBT.
• Signers inspect the transaction and its metadata to decide whether they agree with the transaction. They can use amount information from the UTXOs to assess the values and fees involved. If they agree, they produce a partial signature for the inputs for which they have relevant key(s).
• A Finalizer is run for each input to convert the partial signatures and possibly script information into a final scriptSig and/or scriptWitness.
• An Extractor produces a valid Bitcoin transaction (in network format) from a PSBT for which all inputs are finalized.

Generally, each of the above (excluding Creator and Extractor) will simply add more and more data to a particular PSBT, until all inputs are fully signed. In a naive workflow, they all have to operate sequentially, passing the PSBT from one to the next, until the Extractor can convert it to a real transaction. In order to permit parallel operation, Combiners can be employed which merge metadata from different PSBTs for the same unsigned transaction.

The names above in bold are the names of the roles defined in BIP174. They're useful in understanding the underlying steps, but in practice, software and hardware implementations will typically implement multiple roles simultaneously.

PSBT in Bitcoin Core

RPCs

• converttopsbt (Creator) is a utility RPC that converts an unsigned raw transaction to PSBT format. It ignores existing signatures.
• createpsbt (Creator) is a utility RPC that takes a list of inputs and outputs and converts them to a PSBT with no additional information. It is equivalent to calling createrawtransaction followed by converttopsbt.
• walletcreatefundedpsbt (Creator, Updater) is a wallet RPC that creates a PSBT with the specified inputs and outputs, adds additional inputs and change to it to balance it out, and adds relevant metadata. In particular, for inputs that the wallet knows about (counting towards its normal or watch-only balance), UTXO information will be added. For outputs and inputs with UTXO information present, key and script information will be added which the wallet knows about. It is equivalent to running createrawtransaction, followed by fundrawtransaction, and converttopsbt.
• walletprocesspsbt (Updater, Signer, Finalizer) is a wallet RPC that takes as input a PSBT, adds UTXO, key, and script data to inputs and outputs that miss it, and optionally signs inputs. Where possible it also finalizes the partial signatures.
• descriptorprocesspsbt (Updater, Signer, Finalizer) is a node RPC that takes as input a PSBT and a list of descriptors. It updates SegWit inputs with information available from the UTXO set and the mempool and signs the inputs using the provided descriptors. Where possible it also finalizes the partial signatures.
• utxoupdatepsbt (Updater) is a node RPC that takes a PSBT and updates it to include information available from the UTXO set (works only for SegWit inputs).
• finalizepsbt (Finalizer, Extractor) is a utility RPC that finalizes any partial signatures, and if all inputs are finalized, converts the result to a fully signed transaction which can be broadcast with sendrawtransaction.
• combinepsbt (Combiner) is a utility RPC that implements a Combiner. It can be used at any point in the workflow to merge information added to different versions of the same PSBT. In particular it is useful to combine the output of multiple Updaters or Signers.
• joinpsbts (Creator) is a utility RPC that joins multiple PSBTs together, concatenating the inputs and outputs. This can be used to construct CoinJoin transactions.
• decodepsbt is a diagnostic utility RPC which will show all information in a PSBT in human-readable form, as well as compute its eventual fee if known.
• analyzepsbt is a utility RPC that examines a PSBT and reports the current status of its inputs, the next step in the workflow if known, and if possible, computes the fee of the resulting transaction and estimates the final weight and feerate.

Workflows

Multisig with multiple Bitcoin Core instances

For a quick start see Basic M-of-N multisig example using descriptor wallets and PSBTs.