PayToScriptHash

Pay-to-Script-Hash (P2SH) is a transaction output type used in Bitcoin that allows funds to be sent to the hash of a script rather than to a public key or a fixed script. The idea is to enable complex spending conditions to be enforced without placing the full script on the blockchain at the time of funding.

In a P2SH output, the scriptPubKey is OP_HASH160 <script_hash> OP_EQUAL, where script_hash is the HASH160 (RIPEMD-160 after SHA-256) of the redeem script. To spend such an output, the spender provides a scriptSig that includes the redeem script and the data needed to satisfy the redeem script (for example, multiple signatures). The Bitcoin Script engine then executes the redeem script using the provided data. If the redeem script evaluates to true, the spend is valid.

Redeem scripts can encode a variety of conditions, most commonly multi-signature requirements (for example, 2-of-3 keys), time-locked access, or other complex rules. By storing only the hash on the blockchain, P2SH reduces the on-chain data needed for locking conditions and allows funds to be directed to broadly defined scripts without exposing their details until the funds are spent. This also gives recipients flexibility in later spending strategies.

A key consideration is the risk that the redeem script or its handling is lost or mismanaged; if the necessary data or the redeem script itself is not recoverable, funds can become unspendable. P2SH addresses typically begin with 3 in Bitcoin’s address format. P2SH has been widely adopted to enable versatile scripting without complicating the funding transaction.