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lesson // bitcoin

PSBT Workflows

Coordinate multi-party signing with Partially Signed Bitcoin Transactions.

intermediate6 days

Public lesson — sign in to track progress on this roadmap.

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On this page

Learning objectives

  • Explain the PSBT roles: creator, updater, signer, finalizer, extractor
  • Carry a PSBT across wallet and hardware boundaries
  • Know when to use PSBTv0 vs later extensions conceptually

study // plan

Lessons are primers. Depth comes from required reading, interactive labs, reflection, and a hands-on check with evidence — the BOSS study pattern.

Research on Bitcoin Search
BIP174PSBT

Required reading

  • bipBIP-174 PSBT

Reflection prompts

  1. Explain PSBT Workflows to a teammate without jargon — what problem does it solve?
  2. What would break in production if you misunderstood PSBT Workflows?
  3. Which BIP, book chapter, or Core doc is authoritative here, and what did you verify?

Lab // Regtest check

After reading, run one hands-on check related to PSBT Workflows. Prefer local regtest or Polar over mainnet.

evidence required

  • ·Command output or screenshot from your local lab
  • ·One sentence on what you observed vs expected
  • ·Link to the required reading section you used

PSBT (Partially Signed Bitcoin Transaction) is a standard container for incomplete transactions plus the metadata signers need (UTXO info, paths, scripts, partial signatures).

Why this matters

Hardware wallets, multisig cosigners, and watch-only constructors should not invent proprietary blob formats. PSBT is the interoperability layer.

Analogy

A PSBT is a shared clipboard for a group project: one person drafts the document, others add signatures in the right places, someone finalizes, then you submit.

Roles

PSBT creator updater signers finalizer broadcast
PSBT moves through roles until signatures are complete and extractable.

Loading diagram…

PSBT moves through roles until signatures are complete and extractable.
bitcoin-cli -regtest walletcreatefundedpsbt '[]' '{"<addr>":1.0}'
bitcoin-cli -regtest walletprocesspsbt <psbt>

further reading

  • docsBitcoin Core PSBT RPCs

    See walletcreatefundedpsbt, walletprocesspsbt, finalizepsbt, send.

  • articleBitcoin Optech: PSBT

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prevRegtest DevelopmentnextMini Wallet Project

On this page

Press Shift + ? for keyboard shortcuts.

Press R to research on Bitcoin Search.

bitcoin-cli -regtest finalizepsbt <psbt>

Include witness UTXO data

Signers need previous output information. Incomplete PSBTs fail mysteriously on hardware devices when UTXO data is missing.

Common mistakes

  • Asking hardware to sign without verifying outputs on the device screen
  • Mixing finalized and unfinalized blobs in your database
  • Forgetting change outputs belong to your descriptor

Worked mental model

Re-read the diagrams in this lesson once out loud in plain language. If you cannot explain the flow to a friend without jargon, pause and revisit Mastering Bitcoin / Mastering Lightning chapters linked in Resources. Chapter references are intentional, not decorative.

Hands-on habit

Every protocol idea should be paired with one local experiment:

  1. Reproduce the happy path on regtest (or Polar for Lightning)
  2. Break it on purpose (wrong fee, expired invoice, offline peer)
  3. Write down what error you saw and which layer produced it (wallet, node, mempool, peer)

That habit turns reading into builder instinct.

Glossary check

Pick three terms from this lesson and define them in one sentence each without opening notes. Weak definitions mean the lesson is not finished yet.

Resource order

Use Resources in order: narrative book chapter first, then BIP/BOLT for precision, then implementation docs for commands. Jumping straight to RPC flags without the mental model creates brittle knowledge.

Next steps

Build the Mini Wallet project, apply UTXOs, descriptors, regtest, and PSBT in one CLI.