The PSBT Lifecycle

A PSBT is not a static object; it moves through a series of "Roles" as defined in BIP 174. Each role has a specific responsibility in turning a draft into a broadcastable transaction.

1. The Creator

The Creator initializes the PSBT.

• Task: Decide which inputs (UTXOs) to spend and which outputs (recipients) to pay.

• Result: A PSBT containing a "Global" raw transaction with no signatures.

2. The Updater

The Updater adds metadata to the PSBT.

• Task: Find the previous transactions for every input and add them to the PSBT. Add information about the scripts (P2WPKH, P2SH, etc.) and public keys.

• Result: A PSBT that contains everything a signer needs to verify the transaction.

3. The Signer

The Signer is usually a hardware wallet or a person with a private key.

• Task: Verify that the transaction is spending the intended amount to the intended address. Produce a signature.

• Result: A PSBT with one or more "Partial Signatures."

4. The Combiner

In multisig setups, the Combiner merges multiple PSBTs.

• Task: Take two or more PSBTs (each with different signatures) and merge them into one single PSBT containing all signatures.

5. The Finalizer & Extractor

The Finalizer takes the signatures and constructs the final Witness stack. The Extractor then pulls the raw, signed transaction out of the PSBT wrapper.

• Task: Convert the PSBT into the standard hex format used by the Bitcoin P2P network.

• Result: A fully signed transaction ready for broadcast.

Role Workflow Diagram

Creator \u2192 Updater \u2192 Signer(s) \u2192 Combiner \u2192 Finalizer \u2192 Extractor \u2192 Mempool

In the next section, we will analyze the Binary Format and the PSBT "Magic Bytes."