BIP174

BIP174, or Partially Signed Bitcoin Transactions (PSBT), is a Bitcoin Improvement Proposal that standardizes a portable, extensible format for partially signed transactions. It enables multiple parties—such as hardware wallets, custodians, or multisignature setups—to cooperatively prepare and sign a single Bitcoin transaction without exposing private keys, improving interoperability across software and devices.

The PSBT data model is a binary, structured container organized into a global section, input sections, and output sections. Each section carries a set of key-value fields, including the unsigned transaction, partial signatures, scripts (redeem and witness), sighash types, and final scripts. Metadata such as key fingerprints and derivation paths can be included. The format is designed to be forward-compatible, allowing unknown fields to be attached for future extensions without breaking existing tooling.

A typical workflow begins with creating an unsigned transaction and converting it into a PSBT. The PSBT is then distributed to signers who add their partial signatures and any required data. Signers can merge PSBTs, finalize inputs, and extract the fully signed transaction for broadcast. The specification defines rules for merging and finalizing PSBTs to preserve all collected data and ensure correct transaction construction.

Adoption and impact: PSBT has been widely adopted by wallets, hardware devices, and custody platforms to support cross-device and offline signing workflows. It supports a range of transaction types, including modern witness programs, and is designed to accommodate evolving scripting features while maintaining interoperability across different implementations.

History: BIP174 was proposed to standardize PSBTs by Andrew Chow and a group of contributors. It was designed to maximize interoperability and has been implemented across major Bitcoin tooling and ecosystems since its publication.