How to create PSBT (Partially Signed Bitcoin Transaction) through Coldcard Mk4?

Creating a Partially Signed Bitcoin Transaction (PSBT) using the Coldcard Mk4 is a process that enhances security by allowing transactions to be signed offline. This guide will walk you through the detailed steps required to create and manage a PSBT using your Coldcard Mk4.

Preparing Your Coldcard Mk4

Before you begin, ensure your Coldcard Mk4 is set up and ready to use. You should have already initialized your device, set a PIN, and backed up your seed phrase. If you haven't done these steps, refer to the Coldcard user manual for initial setup instructions.

• Connect your Coldcard Mk4 to a computer using the provided USB cable. The device will display a message indicating it is ready to communicate.
• Ensure your Coldcard firmware is up to date. You can check for updates by navigating to the 'Settings' menu on the device and selecting 'Firmware' to see if an update is available.

Creating a PSBT on a Computer

To create a PSBT, you will need to use a computer with a Bitcoin wallet software that supports PSBTs. Popular options include Electrum, Sparrow Wallet, or Bitcoin Core. For this guide, we will use Electrum as an example.

• Install and set up Electrum on your computer. Ensure you have a wallet created and funded with the necessary Bitcoin.
• Open Electrum and navigate to the 'Tools' menu, then select 'Load Transaction' and choose 'From File' to import a PSBT file if you already have one, or 'New' to create a new transaction.
• Enter the recipient's Bitcoin address and the amount you wish to send. You can also add a transaction fee if required.
• Click on 'Preview' to review the transaction details. If everything looks correct, click 'Sign' to generate the PSBT.

Transferring the PSBT to Coldcard Mk4

Once you have created the PSBT on your computer, you need to transfer it to your Coldcard Mk4 for signing.

• Save the PSBT file generated by Electrum to your computer. The file will have a .psbt extension.
• Connect your Coldcard Mk4 to your computer if it's not already connected.
• Navigate to the 'Addresses' menu on your Coldcard and select 'Import PSBT'.
• Select the PSBT file you saved from Electrum and transfer it to your Coldcard. The device will display the transaction details for you to review.

Signing the PSBT on Coldcard Mk4

After transferring the PSBT to your Coldcard Mk4, you can sign it offline, ensuring the highest level of security.

• Review the transaction details displayed on your Coldcard Mk4. Ensure the recipient's address, amount, and fee are correct.
• Select 'Sign' to proceed. The Coldcard will prompt you to enter your PIN to authorize the transaction.
• Enter your PIN and confirm the transaction. The Coldcard will then sign the PSBT and generate a new file with the signed transaction.

Exporting the Signed PSBT

Once the PSBT is signed, you need to export it back to your computer to broadcast the transaction to the Bitcoin network.

• Navigate to the 'Addresses' menu on your Coldcard and select 'Export PSBT'.
• Choose the signed PSBT file and transfer it back to your computer. The file will now have a .psbt extension but will contain the signed transaction data.
• Disconnect your Coldcard Mk4 from the computer to maintain security.

Broadcasting the Signed Transaction

With the signed PSBT file on your computer, you can now broadcast the transaction to the Bitcoin network using your wallet software.

• Open Electrum and navigate to the 'Tools' menu, then select 'Load Transaction' and choose 'From File'.
• Select the signed PSBT file you exported from your Coldcard Mk4.
• Click on 'Broadcast' to send the transaction to the Bitcoin network. Electrum will confirm the transaction has been successfully broadcast.

Frequently Asked Questions

Q: Can I use other hardware wallets to create PSBTs?

A: Yes, other hardware wallets like Trezor and Ledger also support PSBTs. The process may vary slightly depending on the device and the wallet software you use.

Q: What happens if I lose the PSBT file before signing it?

A: If you lose the PSBT file before signing it, you will need to recreate the transaction on your computer and transfer it to your Coldcard Mk4 again. Always ensure you have backups of important files.

Q: Is it possible to sign a PSBT with multiple signatures?

A: Yes, PSBTs support multi-signature transactions. You can create a PSBT that requires multiple signatures and sign it with different Coldcard devices or other compatible hardware wallets.

Q: How can I verify the transaction details on my Coldcard Mk4?

A: The Coldcard Mk4 displays the transaction details, including the recipient's address, amount, and fee, before you sign it. You can also use the 'Verify Address' feature to ensure the address is correct before proceeding with the transaction.