How Do You Use PSBT for a Bitcoin Multisig Transfer?

A Bitcoin multisig transfer with PSBT takes three steps: the coordinator software creates the unsigned transaction, fills in the required information and produces a PSBT; the PSBT is distributed to the signers, who each verify and sign it on their own devices; and the signatures are collected and combined, after which the transaction is finalized and broadcast once the threshold is met. The example below uses the 2-of-3 multisig wallet most common among businesses.

What Do You Need to Prepare Before Signing?

Each of the three signers generates a key on their own hardware wallet or offline device and gives only the extended public key (xpub) to the coordinator software. The coordinator software combines the three xpubs and the threshold into a wallet configuration and uses it to generate multisig receiving addresses. It holds no private keys itself.

This configuration should also be registered on every signing device, so each device knows the other two public keys and can verify during signing that the change really goes back to the same multisig wallet. The configuration itself must be backed up as well: without it, spending is very difficult even if you have enough private keys, for the same reason P2SH multisig requires backing up the redeem script.

Step 1: How Do You Create a Multisig PSBT?

The initiator enters the recipient address and amount in the coordinator software, which selects the UTXOs to spend and sends the remainder to a new change address in the multisig wallet. It then attaches to each input the UTXO being spent, the multisig witness script and the derivation path of each of the three keys, and attaches derivation paths to the change output as well. The result is a PSBT ready to distribute.

Step 2: How Do the Signers Sign?

There are two approaches. In sequential signing, the PSBT goes to the first signer, and once signed, it is passed with that signature to the second. In parallel signing, the same PSBT is sent to both signers at once, each returns a signed copy, and the coordinator software combines them. Parallel is faster, while sequential makes it easier for approvers to see that the previous signer has already confirmed.

Either way, each signer must independently verify the recipient address, amount, fee and change on their own device’s screen, rather than signing simply because the previous person did. A transaction the device cannot display clearly should not be signed; otherwise, it is blind signing.

Step 3: How Do You Combine, Finalize and Broadcast?

The coordinator software combines the returned PSBTs. Before combining, it checks that the unsigned transaction in each copy is exactly the same, and if any copy has been altered, the combination fails. Once two signatures are collected, the software assembles the signatures and witness script into the final unlocking data in the order the script requires, extracts the raw transaction and broadcasts it, then tracks confirmation using the transaction hash.

What If Someone Refuses to Sign or Wants to Withdraw?

If a signer spots a problem and refuses to sign, the transaction cannot reach the threshold and the funds stay in the multisig address. Note, however, that a PSBT already carrying one signature does not expire on its own; it can still be broadcast as soon as one more person signs.

To cancel it for good, you can spend the same inputs in a new transaction back to your own wallet and get it confirmed first, so the UTXOs the old PSBT spends no longer exist. Business processes should define “cancel a pending PSBT” as an explicit operation, rather than simply deleting the file.

Conclusion

PSBT turns a multisig transfer into a clear process: create, distribute, verify and sign separately, then combine and broadcast, with each signer free to use a different device. The real risks lie in whether signers verify independently and whether pending PSBTs are properly cancelled. Safeheron’s MPC Wallet-as-a-Service provides businesses with MPC key management and a policy engine.

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