Definition
A Partially Signed Bitcoin Transaction, or PSBT, is a standardized container format defined in BIP174 for moving a transaction between different pieces of software and hardware while it is being built and signed. It lets a transaction be constructed in one place, signed in another, and finalized somewhere else, without ever exposing private keys to an online machine.
Why PSBT exists
Before BIP174 there was no common standard for handing an unsigned transaction between tools, so every wallet invented its own format and interoperability was poor. PSBT separates the roles of creator, signer, and finalizer, which is exactly the separation needed for cold storage, air-gapped signing, multisig coordination, and CoinJoin.
How it flows in practice
Coordinator software assembles the PSBT with all the input details a signer needs. The PSBT is then carried to each signing device, often by USB, microSD, NFC, or an animated QR code, so the keys never touch the internet. The hardware wallet verifies the details on its own screen, adds its signature, and passes the PSBT back. Once every required signature is collected, the PSBT is finalized into a normal Bitcoin transaction and broadcast.
For sovereign Bitcoiners, PSBT is the backbone of secure self-custody and collaborative vaults. It pairs naturally with the Schnorr Signature aggregation that simplifies multisig, and a finalized PSBT can be broadcast with Replace-By-Fee (RBF) signaling enabled so its fee can be bumped later if needed.
In Simple Terms
A Partially Signed Bitcoin Transaction, or PSBT, is a standardized container format defined in BIP174 for moving a transaction between different pieces of software and…