Add PSBT documentation

Author: sipa

doc/README.md

@@ -75,6 +75,7 @@ The Bitcoin repo's [root README](/README.md) contains relevant information on th
 - [Tor Support](tor.md)
 - [Init Scripts (systemd/upstart/openrc)](init.md)
 - [ZMQ](zmq.md)
+- [PSBT support](psbt.md)
 
 License
 ---------------------

doc/psbt.md

@@ -0,0 +1,132 @@
+# PSBT Howto for Bitcoin Core
+
+Since Bitcoin Core 0.17, an RPC interface exists for Partially Signed Bitcoin
+Transactions (PSBTs, as specified in
+[BIP 174](https://github.com/bitcoin/bips/blob/master/bip-0174.mediawiki)).
+
+This document describes the overall workflow for producing signed transactions
+through the use of PSBT, and the specific RPC commands used in typical
+scenarios.
+
+## PSBT in general
+
+PSBT is an interchange format for Bitcoin transactions that are not fully signed
+yet, together with relevant metadata to help entities work towards signing it.
+It is intended to simplify workflows where multiple parties need to cooperate to
+produce a transaction. Examples include hardware wallets, multisig setups, and
+[CoinJoin](https://bitcointalk.org/?topic=279249) transactions.
+
+### Overall workflow
+
+Overall, the construction of a fully signed Bitcoin transaction goes through the
+following steps:
+
+- A **Creator** proposes a particular transaction to be created. They construct
+  a PSBT that contains certain inputs and outputs, but no additional metadata.
+- For each input, an **Updater** adds information about the UTXOs being spent by
+  the transaction to the PSBT. They also add information about the scripts and
+  public keys involved in each of the inputs (and possibly outputs) of the PSBT.
+- **Signers** inspect the transaction and its metadata to decide whether they
+  agree with the transaction. They can use amount information from the UTXOs
+  to assess the values and fees involved. If they agree, they produce a
+  partial signature for the inputs for which they have relevant key(s).
+- A **Finalizer** is run for each input to convert the partial signatures and
+  possibly script information into a final `scriptSig` and/or `scriptWitness`.
+- An **Extractor** produces a valid Bitcoin transaction (in network format)
+  from a PSBT for which all inputs are finalized.
+
+Generally, each of the above (excluding Creator and Extractor) will simply
+add more and more data to a particular PSBT, until all inputs are fully signed.
+In a naive workflow, they all have to operate sequentially, passing the PSBT
+from one to the next, until the Extractor can convert it to a real transaction.
+In order to permit parallel operation, **Combiners** can be employed which merge
+metadata from different PSBTs for the same unsigned transaction.
+
+The names above in bold are the names of the roles defined in BIP174. They're
+useful in understanding the underlying steps, but in practice, software and
+hardware implementations will typically implement multiple roles simultaneously.
+
+## PSBT in Bitcoin Core
+
+### RPCs
+
+- **`converttopsbt` (Creator)** is a utility RPC that converts an
+  unsigned raw transaction to PSBT format. It ignores existing signatures.
+- **`createpsbt` (Creator)** is a utility RPC that takes a list of inputs and
+  outputs and converts them to a PSBT with no additional information. It is
+  equivalent to calling `createrawtransaction` followed by `converttopsbt`.
+- **`walletcreatefundedpsbt` (Creator, Updater)** is a wallet RPC that creates a
+  PSBT with the specified inputs and outputs, adds additional inputs and change
+  to it to balance it out, and adds relevant metadata. In particular, for inputs
+  that the wallet knows about (counting towards its normal or watch-only
+  balance), UTXO information will be added. For outputs and inputs with UTXO
+  information present, key and script information will be added which the wallet
+  knows about. It is equivalent to running `createrawtransaction`, followed by
+  `fundrawtransaction`, and `converttopsbt`.
+- **`walletprocesspsbt` (Updater, Signer, Finalizer)** is a wallet RPC that takes as
+  input a PSBT, adds UTXO, key, and script data to inputs and outputs that miss
+  it, and optionally signs inputs. Where possible it also finalizes the partial
+  signatures.
+- **`finalizepsbt` (Finalizer, Extractor)** is a utility RPC that finalizes any
+  partial signatures, and if all inputs are finalized, converts the result to a
+  fully signed transaction which can be broadcast with `sendrawtransaction`.
+- **`combinepsbt` (Combiner)** is a utility RPC that implements a Combiner. It
+  can be used at any point in the workflow to merge information added to
+  different versions of the same PSBT. In particular it is useful to combine the
+  output of multiple Updaters or Signers.
+- **`decodepsbt`** is a diagnostic utility RPC which will show all information in
+  a PSBT in human-readable form, as well as compute its eventual fee if known.
+
+### Workflows
+
+#### Multisig with multiple Bitcoin Core instances
+
+Alice, Bob, and Carol want to create a 2-of-3 multisig address. They're all using
+Bitcoin Core. We assume their wallets only contain the multisig funds. In case
+they also have a personal wallet, this can be accomplished through the
+multiwallet feature - possibly resulting in a need to add `-rpcwallet=name` to
+the command line in case `bitcoin-cli` is used.
+
+Setup:
+- All three call `getnewaddress` to create a new address; call these addresses
+  *Aalice*, *Abob*, and *Acarol*.
+- All three call `getaddressinfo X`, with *X* their respective address, and
+  remember the corresponding public keys. Call these public keys *Kalice*,
+  *Kbob*, and *Kcarol*.
+- All three now run `addmultisigaddress 2 ["Kalice","Kbob","Kcarol"]` to teach
+  their wallet about the multisig script. Call the address produced by this
+  command *Amulti*. They may be required to explicitly specify the same
+  addresstype option each, to avoid constructing different versions due to
+  differences in configuration.
+- They also run `importaddress "Amulti" "" false` to make their wallets treat
+  payments to *Amulti* as contributing to the watch-only balance.
+- Others can verify the produced address by running
+  `createmultisig 2 ["Kalice","Kbob","Kcarol"]`, and expecting *Amulti* as
+  output. Again, it may be necessary to explicitly specify the addresstype
+  in order to get a result that matches. This command won't enable them to
+  initiate transactions later, however.
+- They can now give out *D* as address others can pay to.
+
+Later, when *V* BTC has been received on *Amulti*, and Bob and Carol want to
+move the coins in their entirety to address *Asend*, with no change. Alice
+does not need to be involved.
+- One of them - let's assume Carol here - initiates the creation. She runs
+  `walletcreatefundedpsbt [] {"Asend":V} 0 false {"subtractFeeFromOutputs":[0], "includeWatching":true}`.
+  We call the resulting PSBT *P*. P does not contain any signatures.
+- Carol needs to sign the transaction herself. In order to do so, she runs
+  `walletprocesspsbt P`, and gives the resulting PSBT *P2* to Bob.
+- Bob inspects the PSBT using `decodepsbt "P2"` to determine if the transaction
+  has indeed just the expected input, and an output to *Asend*, and the fee is
+  reasonable. If he agrees, he calls `walletprocesspsbt "P2"` to sign. The
+  resulting PSBT *P3* contains both Carol's and Bob's signature.
+- Now anyone can call `finalizepsbt "P2"` to extract a fully signed transaction
+  *T*.
+- Finally anyone can broadcast the transaction using `sendrawtransaction "T"`.
+
+In case there are more signers, it may be advantageous to let them all sign in
+parallel, rather passing the PSBT from one signer to the next one. In the
+above example this would translate to Carol handing a copy of *P* to each signer
+separately. They can then all invoke `walletprocesspsbt P`, and end up with
+their individually-signed PSBT structures. They then all send those back to
+Carol (or anyone) who can combine them using `combinepsbt`. The last two steps
+(`finalizepsbt` and `sendrawtransaction`) remain unchanged.