Compatibility Hurdles in Bitcoin Core 32.0: The PSBT Version Gap

Bitcoin Core 32.0 has introduced a significant compatibility hurdle for users operating in multisig environments. The latest update’s graphical user interface (GUI) now defaults to a newer transaction format that is unrecognizable to older versions of the software. This discrepancy can effectively halt co-signing workflows where different versions of Bitcoin Core are used in tandem, leading to "unsupported version" errors during the transaction process.

Understanding the PSBT Version Conflict

At the heart of the issue is the Partially Signed Bitcoin Transaction (PSBT) format, which serves as the standard for exchanging transaction data between different signers. While earlier versions of Bitcoin Core utilized PSBT v0, the version 32.0 GUI automatically generates PSBT v2 files. Based on the specifications of BIP 370, this newer version allows for more flexible modifications to transaction inputs and outputs after creation. However, it is intentionally designed to be incompatible with legacy software that only handles v0. As a result, when a newer Core wallet prepares a transaction, older nodes are unable to decode or sign it, breaking the chain of communication required for multisig security.

Delayed Fixes and Manual Workarounds

Although developers have proposed a fix to restore the GUI’s default output to the more compatible v0 format, the resolution has been deferred. Maintainers moved the compatibility patch to the 32.1 milestone, noting that version 32.0 was already due for release without a ready-to-backport solution. In the interim, users can avoid these stalls by utilizing the software’s Command Line or RPC interface rather than the GUI. By explicitly setting the psbt_version parameter to 0 when calling commands like walletcreatefundedpsbt, users can manually force the creation of legacy-compatible files, ensuring that mixed-version signing groups can continue to operate until a permanent GUI update is deployed.