This type of transaction is widely used in hardware wallets.
The PSBT creates a half-signed transaction, protecting the private keys.
Programmers Alekos Filini and Daniela Brozzoni has launched the website bip174.org. It functions as a graphical interface allowing users to create and visualize partially signed transactions (PSBT), along with all the values that operate within such a transaction.
PSBT transactions are based on creating a partial signature of a Bitcoin
transaction, allowing the creation and sending of a transaction to be separated. This, in a practical sense, allows the transaction to be created on a secure device, not connected to the Internet, and sent through another device, which is connected to the Internet but will not have access to the private keys.
The announcement of the launch of this tool was published on the Bitcoin developer mailing list (Bitcoin-dev) on August 25.
While the PSBT tool is nothing new, published in BIP 174, whose first information
was released in mid-2018, the tool proposed on the bip174.org portal, does represent a novelty as users can see the operation of this type of transaction. Within the portal, users will have examples that will allow them to visualize the data of each of them, including multi-signature transactions. Source: bit174.org.
The portal separates into sections each of the parts that make up a PSBT transaction, highlighting the Inputs and Outputs. Among the Inputs to be placed are the UTXO
and outgoing signatures.
Although the tool may be useful, it may be a bit counterproductive to use it online, since the main purpose for which PSBT is mostly used is to protect private signatures. This is because, with a PSBT transaction, you can sign the transaction from an offline computer, then export it to another computer, which does have an Internet connection, and proceed to send it.
However, to avoid this scenario, users can download the source code from the repository on GitHub
, which does not require any kind of Internet connection.
Usefulness of the trans
This type of transaction, as already mentioned throughout the text, offers an extra layer of security over private keys by allowing the signature and sending of the transaction to be separated between two different devices.
This type of transaction is used, to a large extent, by hardware wallets such as Coldcard. With these, it is possible to create partially signed transactions from Coldcard and propagate them over the network from the Electrum wallet.
The security is due to the fact that, if for some reason, the wallet that is connected to the Internet is breached, the attacker will not be able to change anything in the PSBT transaction that you have created from another device, since the signatures necessary to create a new transaction are somewhere else.