Tales from the Crypt #127: Andrew Chow

— Andrew Chow developed the PSBT (Partially Signed Bitcoin Transaction) standard to enable hardware wallets to work seamlessly with Bitcoin Core, replacing incompatible ad-hoc formats used by different software.

— PSBT is a well-defined, extensible standard that packages all transaction information needed for signing into one portable string, simplifying coordination between wallets and hardware devices.

— Coin selection is a hard computational problem requiring balance between minimizing current fees, avoiding future dust, and maintaining privacy—branch and bound algorithm uses tree pruning to optimize combinations efficiently.

— CoinJoins improve privacy but remain difficult to coordinate at scale; manual coordination is cumbersome, and merchant adoption barriers (like BTCPay's operational complexity) limit payjoin's viability.

— Hardware wallets each implement transaction signing differently despite solving the same problem, creating implementation burdens; Cold Card's adoption of PSBT simplified hardware wallet support in HWI.

— Descriptor wallets and hardware wallet script managers represent long-term refactoring of Bitcoin Core's wallet to separate concerns and support arbitrary scripts, multisig, and future protocols like Taproot.

— If you hold a hardware wallet, PSBT support in your wallet software (Wasabi, Coldcard, Bitcoin Core) means you can now move transactions between devices with a single portable file—test this on testnet before using on mainnet, and consider a multisig setup for added security.

— Monitor your UTXO dust levels and consider consolidation during low-fee periods to avoid being locked out of your coins during fee spikes; use wallets (Wasabi) that force coin selection awareness rather than auto-selecting to optimize for the wrong metric.