Bitcoin and Bitcoin Cash Technical Guide for AI Agents (2025)

This document provides a comprehensive technical reference for AI Agents working with Bitcoin (BTC) and Bitcoin Cash (BCH) transaction systems, covering address types, multisig mechanisms, and transaction sending workflows.

Overview
Address Types
Multisig Mechanisms
Transaction Sending Mechanisms
Key Differences Between BTC and BCH
Quick Reference Tables

Overview

Bitcoin (BTC) vs Bitcoin Cash (BCH)

Feature	Bitcoin (BTC)	Bitcoin Cash (BCH)
Fork Date	Original (2009)	August 2017 (hard fork from BTC)
Block Size	1-4 MB (with SegWit)	32 MB
SegWit Support	✅ Yes (activated 2017)	❌ No
Taproot Support	✅ Yes (activated 2021)	❌ No
Primary Focus	Store of value, Layer 2 solutions	Peer-to-peer electronic cash
Core Implementation	Bitcoin Core	Bitcoin ABC / BCHN
Required Version	v22.0+ (for Taproot)	v0.24.0+

Shared Characteristics

Both BTC and BCH share the following foundational properties:

UTXO Model: Unspent Transaction Output model for tracking ownership
ECDSA Signatures: secp256k1 elliptic curve for cryptographic operations
SHA-256 Mining: Same proof-of-work algorithm
Base58Check Encoding: For legacy address format encoding
Script Language: Bitcoin Script for transaction validation

Address Types

Bitcoin (BTC) Address Types

Bitcoin supports four main address types, each corresponding to different script types and BIP standards:

1. Legacy (P2PKH) - BIP44

Purpose: 44'
Derivation Path: m/44'/0'/account'/change/index

Property	Value
Prefix	`1` (mainnet), `m` or `n` (testnet)
Length	25-34 characters
Encoding	Base58Check
Script Type	Pay-to-Public-Key-Hash
Example	`1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa`

ScriptPubKey Structure:

OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG

Pros:

Maximum compatibility with all wallets/exchanges
Widely understood and documented

Cons:

Largest transaction size
Highest fees
No SegWit benefits

2. P2SH-SegWit (P2SH-P2WPKH) - BIP49

Purpose: 49'
Derivation Path: m/49'/0'/account'/change/index

Property	Value
Prefix	`3` (mainnet), `2` (testnet)
Length	34 characters
Encoding	Base58Check
Script Type	Pay-to-Script-Hash wrapping SegWit
Example	`3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy`

ScriptPubKey Structure:

OP_HASH160 <scriptHash> OP_EQUAL

Pros:

SegWit fee savings (~26% reduction)
Backward compatible with legacy wallets
Improved transaction malleability protection

Cons:

Not as efficient as native SegWit
More complex script structure

3. Native SegWit (P2WPKH) - BIP84

Purpose: 84'
Derivation Path: m/84'/0'/account'/change/index

Property	Value
Prefix	`bc1q` (mainnet), `tb1q` (testnet)
Length	42 characters
Encoding	Bech32
Script Type	Pay-to-Witness-Public-Key-Hash
Example	`bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq`

Witness Script Structure:

0 <20-byte pubKeyHash>

Pros:

Best pre-Taproot fee efficiency (~38% reduction)
Full SegWit benefits
Error detection with Bech32 checksum

Cons:

Some older wallets don't support sending to bc1q

4. Taproot (P2TR) - BIP86

Purpose: 86'
Derivation Path: m/86'/0'/account'/change/index

Property	Value
Prefix	`bc1p` (mainnet), `tb1p` (testnet)
Length	62 characters
Encoding	Bech32m
Script Type	Pay-to-Taproot
Signature	Schnorr (BIP340)
Example	`bc1p5cyxnuxmeuwuvkwfem96lqzszd02n6xdcjrs20cac6yqjjwudpxqkedrcr`

Witness Script Structure:

1 <32-byte x-only pubKey>

Pros:

Best fee efficiency (~50% reduction for multisig)
Enhanced privacy (all spends look identical)
Schnorr signature aggregation (MuSig2)
Script path spending for complex contracts

Cons:

Requires Bitcoin Core v22.0+
Some exchanges still don't support withdrawal to bc1p

Bitcoin Cash (BCH) Address Types

Bitcoin Cash uses the CashAddr format (introduced 2018) with its own prefix and encoding:

1. CashAddr P2PKH

Property	Value
Prefix	`bitcoincash:q` (mainnet), `bchtest:q` (testnet)
Length	~50 characters (with prefix)
Encoding	CashAddr (modified Bech32)
Script Type	Pay-to-Public-Key-Hash
Example	`bitcoincash:qp3wjpa3tjlj042z2wv7hahsldgwhwy0rq9sywjpyy`

ScriptPubKey Structure:

OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG

2. CashAddr P2SH

Property	Value
Prefix	`bitcoincash:p` (mainnet), `bchtest:p` (testnet)
Length	~50 characters (with prefix)
Encoding	CashAddr (modified Bech32)
Script Type	Pay-to-Script-Hash
Example	`bitcoincash:pr0662zpd7vr936d83f64u629v886aan7c77r3j5v5`

CashAddr Characteristics:

Case-insensitive (always lowercase recommended)
Built-in checksum for error detection
Network prefix prevents cross-chain sending errors
Can omit prefix when network is unambiguous

3. Legacy Format (Backward Compatible)

BCH can also use legacy Base58Check addresses (starts with 1 for P2PKH, 3 for P2SH), but CashAddr is strongly recommended to prevent accidental BTC/BCH cross-sends.

Multisig Mechanisms

Multisig Concepts

Definition: Multi-signature (multisig) requires M-of-N signatures to authorize a transaction.

Common Configurations:

2-of-2: Both parties must sign (joint control)
2-of-3: Any 2 of 3 parties must sign (recovery/escrow)
3-of-5: Corporate treasury management

Bitcoin Multisig Types

1. Traditional P2SH Multisig (Legacy)

Address Prefix: 3 (mainnet)
Script Type: Pay-to-Script-Hash
BIP: BIP11, BIP16

Redeem Script Structure:

<M> <PubKey1> <PubKey2> ... <PubKeyN> <N> OP_CHECKMULTISIG

Example 2-of-3:

2 <PubKey1> <PubKey2> <PubKey3> 3 OP_CHECKMULTISIG

Characteristics:

Property	Value
Maximum Keys	15 (due to OP_CHECKMULTISIG limit)
Transaction Size	~370-400 bytes (2-of-3)
Privacy	Low (multisig is visible on-chain)
Signature Type	ECDSA

2. P2WSH Multisig (Native SegWit)

Address Prefix: bc1q (longer than P2WPKH)
Script Type: Pay-to-Witness-Script-Hash
BIP: BIP141, BIP143

Witness Script Structure:

0 <32-byte scriptHash>

Characteristics:

Property	Value
Maximum Keys	15
Transaction Size	~270-300 bytes (2-of-3)
Fee Savings	~27% vs P2SH
Privacy	Low (multisig visible)
Signature Type	ECDSA

3. Taproot Multisig (Key Path)

With Taproot, multisig can be implemented in two ways:

A. Key Path Spending (MuSig2)

Address Prefix: bc1p
Script Type: Pay-to-Taproot (key path)
BIP: BIP340, BIP341, BIP327

MuSig2 Protocol (Two-Round):

Round 1: Nonce Generation (Parallel)
├── Signer 1 generates nonce
├── Signer 2 generates nonce
└── Signer N generates nonce
    │
    ▼
  Exchange public nonces
    │
    ▼
Round 2: Partial Signing (Sequential)
├── Signer 1 creates partial signature
├── Signer 2 creates partial signature
└── Signer N creates partial signature
    │
    ▼
  Aggregate into single signature

MuSig2 Characteristics:

Property	Value
On-Chain Appearance	Single signature (indistinguishable from single-sig)
Transaction Size	~200-250 bytes
Fee Savings	30-50% vs P2WSH multisig
Privacy	Maximum (looks like single-sig)
Signature Type	Schnorr (64 bytes)
Flexibility	N-of-N only (all signers required)

CRITICAL: Nonce Security

NEVER reuse nonces - Reusing a nonce leaks the private key
Generate fresh nonces for every transaction
Delete nonces after signing

B. Script Path Spending

For M-of-N (where M < N), Taproot uses script path:

Taproot Output Key = Internal Key + TapTweak(Merkle Root)

Script Tree Structure:

              Root
             /    \
        Branch    Leaf3
        /    \     (2-of-3 script)
    Leaf1   Leaf2
    (2-of-3) (2-of-3)

Characteristics:

Multiple spending conditions organized in Merkle tree
Only the used script path is revealed on-chain
Unused branches remain private

Bitcoin Cash Multisig

BCH supports only traditional P2SH multisig (no SegWit/Taproot):

Address Prefix: p (CashAddr)
Script Type: Pay-to-Script-Hash

Characteristics:

Property	Value
Maximum Keys	15
Transaction Size	~370-400 bytes (2-of-3)
Privacy	Low
Signature Type	ECDSA

Transaction Sending Mechanisms

UTXO Model

Both BTC and BCH use the UTXO (Unspent Transaction Output) model:

Transaction Structure:
┌──────────────────────────────────────────────┐
│ Version (4 bytes)                            │
├──────────────────────────────────────────────┤
│ Input Count (VarInt)                         │
├──────────────────────────────────────────────┤
│ Inputs[] (variable)                          │
│   ├── Previous TX Hash (32 bytes)            │
│   ├── Previous Output Index (4 bytes)        │
│   ├── ScriptSig Length (VarInt)              │
│   ├── ScriptSig (variable)                   │
│   └── Sequence (4 bytes)                     │
├──────────────────────────────────────────────┤
│ Output Count (VarInt)                        │
├──────────────────────────────────────────────┤
│ Outputs[] (variable)                         │
│   ├── Value (8 bytes)                        │
│   ├── ScriptPubKey Length (VarInt)           │
│   └── ScriptPubKey (variable)                │
├──────────────────────────────────────────────┤
│ Locktime (4 bytes)                           │
└──────────────────────────────────────────────┘

SegWit Transaction (BTC only):

┌──────────────────────────────────────────────┐
│ Version (4 bytes)                            │
├──────────────────────────────────────────────┤
│ Marker (1 byte) = 0x00                       │
│ Flag (1 byte) = 0x01                         │
├──────────────────────────────────────────────┤
│ Input Count (VarInt)                         │
├──────────────────────────────────────────────┤
│ Inputs[] (scriptSig is empty for SegWit)     │
├──────────────────────────────────────────────┤
│ Output Count (VarInt)                        │
├──────────────────────────────────────────────┤
│ Outputs[]                                    │
├──────────────────────────────────────────────┤
│ Witness[] (SegWit data)                      │
│   └── Per input: signatures and pubkeys      │
├──────────────────────────────────────────────┤
│ Locktime (4 bytes)                           │
└──────────────────────────────────────────────┘

Transaction Workflow

Standard Transaction Flow

1. Create Transaction
   └── Select UTXOs (inputs)
   └── Define outputs (recipients + change)
   └── Calculate fee

2. Sign Transaction
   └── For each input:
       └── Generate signature using private key
       └── Signature covers: outputs, input data, sighash

3. Broadcast Transaction
   └── Send to node/network
   └── Node validates and propagates
   └── Miners include in block

4. Confirmation
   └── Block mined containing transaction
   └── Each subsequent block adds confirmation

PSBT (Partially Signed Bitcoin Transaction)

BIP174 - Standard for offline signing and multi-party transactions

PSBT enables:

Offline/air-gapped signing
Hardware wallet integration
Multi-party signing coordination
Watch-only wallet workflows

PSBT Structure:

┌──────────────────────────────────────────────┐
│ Magic Bytes: "psbt" + 0xFF (5 bytes)         │
├──────────────────────────────────────────────┤
│ Global Map                                   │
│   ├── PSBT_GLOBAL_UNSIGNED_TX               │
│   ├── PSBT_GLOBAL_XPUB (optional)           │
│   └── PSBT_GLOBAL_VERSION                   │
├──────────────────────────────────────────────┤
│ Input Maps[] (one per input)                 │
│   ├── PSBT_IN_WITNESS_UTXO                  │
│   ├── PSBT_IN_PARTIAL_SIG                   │
│   ├── PSBT_IN_SIGHASH_TYPE                  │
│   ├── PSBT_IN_BIP32_DERIVATION              │
│   └── PSBT_IN_TAP_* (Taproot fields)        │
├──────────────────────────────────────────────┤
│ Output Maps[] (one per output)               │
│   ├── PSBT_OUT_BIP32_DERIVATION             │
│   └── PSBT_OUT_TAP_* (Taproot fields)       │
└──────────────────────────────────────────────┘

PSBT Workflow:

Creator (Watch Wallet - Online)
    │
    │ 1. Create unsigned PSBT
    │    - Select UTXOs
    │    - Add witness data
    │    - Save as .psbt file
    ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_0_*.psbt    │
└─────────────────────────────────┘
    │
    │ Transfer via USB/QR
    ▼
Signer 1 (Keygen Wallet - Offline)
    │
    │ 2. Sign with first key
    │    - Add partial signature
    ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_1_*.psbt    │
└─────────────────────────────────┘
    │
    │ Transfer via USB/QR
    ▼
Signer 2 (Sign Wallet - Offline)
    │
    │ 3. Sign with second key
    │    - Add partial signature
    ▼
┌─────────────────────────────────┐
│ payment_15_signed_2_*.psbt      │
└─────────────────────────────────┘
    │
    │ Transfer via USB/QR
    ▼
Finalizer (Watch Wallet - Online)
    │
    │ 4. Finalize PSBT
    │    - Combine signatures
    │    - Create scriptSig/witness
    │    - Extract final transaction
    │
    │ 5. Broadcast
    │    - Send to network
    ▼
    Confirmed on blockchain

MuSig2 Transaction Workflow

For Taproot multisig with MuSig2:

Creator (Watch Wallet)
    │
    │ 1. Create unsigned PSBT with MuSig2 metadata
    ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_0_*.psbt    │
└─────────────────────────────────┘
    │
    ▼
═══════════════════════════════════════
    ROUND 1: NONCE GENERATION (PARALLEL)
═══════════════════════════════════════
    │
    ├──────┬──────┬──────┐
    ▼      ▼      ▼      ▼
  Signer1 Signer2 Signer3
    │      │      │
    │ Generate nonces (can run in parallel)
    │      │      │
    └──────┴──────┴──────┐
                        ▼
┌─────────────────────────────────┐
│ payment_15_nonce_0_*.psbt       │
│ (contains all 3 public nonces)  │
└─────────────────────────────────┘
    │
    ▼
═══════════════════════════════════════
    ROUND 2: PARTIAL SIGNING (SEQUENTIAL)
═══════════════════════════════════════
    │
    │ All nonces must be collected first!
    ▼
  Signer1 ─── Partial Sig 1 ───┐
                              ▼
  Signer2 ─── Partial Sig 2 ───┐
                              ▼
  Signer3 ─── Partial Sig 3 ───┐
                              ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_3_*.psbt    │
│ (contains all partial sigs)     │
└─────────────────────────────────┘
    │
    ▼
═══════════════════════════════════════
    AGGREGATION & BROADCAST
═══════════════════════════════════════
    │
Aggregator (Watch Wallet)
    │
    │ Aggregate partial signatures → single Schnorr sig
    ▼
┌─────────────────────────────────┐
│ payment_15_signed_3_*.psbt      │
│ (final 64-byte Schnorr sig)     │
└─────────────────────────────────┘
    │
    │ Broadcast
    ▼
  Blockchain (looks like single-sig tx!)

Bitcoin Cash Transaction Workflow

BCH uses a simpler workflow without PSBT (legacy raw transactions):

Creator (Watch Wallet)
    │
    │ 1. Create raw transaction
    │    - Hex-encoded transaction
    ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_0_*.tx      │
│ (hex,prev_addresses format)     │
└─────────────────────────────────┘
    │
    ▼
Signer 1 (Keygen Wallet)
    │
    │ 2. Sign with ECDSA
    │    - Create scriptSig
    ▼
┌─────────────────────────────────┐
│ payment_15_unsigned_1_*.tx      │
└─────────────────────────────────┘
    │
    ▼
Signer 2 (Sign Wallet) [if multisig]
    │
    │ 3. Add second signature
    ▼
┌─────────────────────────────────┐
│ payment_15_signed_2_*.tx        │
└─────────────────────────────────┘
    │
    ▼
Broadcaster (Watch Wallet)
    │
    │ 4. Send to network
    ▼
  Confirmed on blockchain

Signature Types Comparison

Signature	Algorithm	Size	Used By
ECDSA	secp256k1	~71-72 bytes (DER encoded)	BTC (legacy/SegWit), BCH
Schnorr	BIP340	64 bytes (fixed)	BTC (Taproot only)

Schnorr Benefits:

Fixed 64-byte size (vs variable ECDSA)
Linearity enables signature aggregation
Batch verification is faster
Provably secure under standard assumptions

Key Differences Between BTC and BCH

Feature Comparison Matrix

Feature	Bitcoin (BTC)	Bitcoin Cash (BCH)
SegWit	✅ Full support	❌ Not implemented
Taproot	✅ Full support	❌ Not implemented
Schnorr Signatures	✅ BIP340	❌ Not available
MuSig2	✅ BIP327	❌ Not available
PSBT	✅ BIP174	⚠️ Limited support
Address Format	Bech32/Bech32m	CashAddr
Block Size	1-4 MB (SegWit)	32 MB
Transaction Malleability	✅ Fixed (SegWit)	⚠️ Still present
RBF	✅ Replace-by-fee	⚠️ Child-pays-for-parent

Implementation Differences in go-crypto-wallet

The codebase handles BTC and BCH through inheritance:

// Bitcoin Cash embeds and extends Bitcoin
type BitcoinCash struct {
    btc.Bitcoin  // Inherits all Bitcoin functionality
}

// BCH overrides chain parameters
func (b *BitcoinCash) initChainParams() {
    switch conf.Name {
    case chaincfg.TestNet3Params.Name:
        conf.Net = TestnetMagic  // BCH-specific magic
    case chaincfg.MainNetParams.Name:
        conf.Net = MainnetMagic
    }
}

Shared Code Path:

Transaction creation
UTXO selection
Fee calculation
Basic signing (ECDSA)

BTC-Only Features:

SegWit witness data handling
Taproot/Schnorr signing
MuSig2 nonce management
PSBT creation/parsing
Bech32/Bech32m encoding

BCH-Specific:

CashAddr encoding/decoding
Different network magic bytes
No witness data in transactions

Quick Reference Tables

Address Type Selection Guide

Use Case	BTC Recommendation	BCH Recommendation
New wallet setup	Taproot (bc1p)	CashAddr P2PKH
Maximum compatibility	P2SH-SegWit (3)	CashAddr P2PKH
Best fees	Taproot (bc1p)	CashAddr P2PKH
Simple multisig	P2WSH	P2SH
Private multisig	MuSig2 Taproot	N/A
Hardware wallet	Native SegWit (bc1q)	CashAddr P2PKH

Multisig Selection Guide

Requirement	BTC Recommendation	BCH Recommendation
2-of-3 corporate	P2WSH or Taproot script path	P2SH
N-of-N with privacy	MuSig2 (Taproot)	N/A
Maximum compatibility	P2SH	P2SH
Best fee efficiency	MuSig2 (Taproot)	N/A (use P2SH)
Threshold (M < N)	Taproot script path	P2SH

Transaction Size Comparison (2-of-3 Multisig)

Type	Size	Fee @ 10 sat/vB	Notes
P2SH (BTC/BCH)	~370 bytes	~3,700 sats	Legacy, most compatible
P2WSH (BTC)	~270 bytes	~2,700 sats	SegWit, ~27% savings
MuSig2 (BTC)	~215 bytes	~2,150 sats	42% savings, max privacy

Network Parameters

Parameter	BTC Mainnet	BTC Testnet	BCH Mainnet	BCH Testnet
P2PKH Prefix	`1`	`m`/`n`	`q` (CashAddr)	`q` (bchtest:)
P2SH Prefix	`3`	`2`	`p` (CashAddr)	`p` (bchtest:)
Bech32 Prefix	`bc1`	`tb1`	N/A	N/A
Bech32m Prefix	`bc1p`	`tb1p`	N/A	N/A
Default Port	8333	18333	8333	18333
RPC Port	8332	18332	8332	18332

Project-Specific Guides

Taproot User Guide - Detailed Taproot implementation
MuSig2 User Guide - MuSig2 multisig operations
PSBT Developer Guide - PSBT implementation details
Wallet Flow - Wallet configuration and usage

External References

Document Version: 1.0 Last Updated: 2025-01-07 Target Audience: AI Agents, Developers Applicable Versions: BTC Core v22.0+, BCH ABC v0.24.0+

Bitcoin and Bitcoin Cash Technical Guide for AI Agents (2025) ​

Table of Contents ​

Overview ​

Bitcoin (BTC) vs Bitcoin Cash (BCH) ​

Shared Characteristics ​

Address Types ​

Bitcoin (BTC) Address Types ​

1. Legacy (P2PKH) - BIP44 ​

2. P2SH-SegWit (P2SH-P2WPKH) - BIP49 ​

3. Native SegWit (P2WPKH) - BIP84 ​

4. Taproot (P2TR) - BIP86 ​

Bitcoin Cash (BCH) Address Types ​

1. CashAddr P2PKH ​

2. CashAddr P2SH ​

3. Legacy Format (Backward Compatible) ​

Multisig Mechanisms ​

Multisig Concepts ​

Bitcoin Multisig Types ​

1. Traditional P2SH Multisig (Legacy) ​

2. P2WSH Multisig (Native SegWit) ​

3. Taproot Multisig (Key Path) ​

Bitcoin Cash Multisig ​

Transaction Sending Mechanisms ​

UTXO Model ​

Transaction Workflow ​

Standard Transaction Flow ​

PSBT (Partially Signed Bitcoin Transaction) ​

MuSig2 Transaction Workflow ​

Bitcoin Cash Transaction Workflow ​

Signature Types Comparison ​

Key Differences Between BTC and BCH ​

Feature Comparison Matrix ​

Implementation Differences in go-crypto-wallet ​

Quick Reference Tables ​

Address Type Selection Guide ​

Multisig Selection Guide ​

Transaction Size Comparison (2-of-3 Multisig) ​

Network Parameters ​

Related Documentation ​

Project-Specific Guides ​

External References ​

Bitcoin and Bitcoin Cash Technical Guide for AI Agents (2025)

Table of Contents

Overview

Bitcoin (BTC) vs Bitcoin Cash (BCH)

Shared Characteristics

Address Types

Bitcoin (BTC) Address Types

1. Legacy (P2PKH) - BIP44

2. P2SH-SegWit (P2SH-P2WPKH) - BIP49

3. Native SegWit (P2WPKH) - BIP84

4. Taproot (P2TR) - BIP86

Bitcoin Cash (BCH) Address Types

1. CashAddr P2PKH

2. CashAddr P2SH

3. Legacy Format (Backward Compatible)

Multisig Mechanisms

Multisig Concepts

Bitcoin Multisig Types

1. Traditional P2SH Multisig (Legacy)

2. P2WSH Multisig (Native SegWit)

3. Taproot Multisig (Key Path)

Bitcoin Cash Multisig

Transaction Sending Mechanisms

UTXO Model

Transaction Workflow

Standard Transaction Flow

PSBT (Partially Signed Bitcoin Transaction)

MuSig2 Transaction Workflow

Bitcoin Cash Transaction Workflow

Signature Types Comparison

Key Differences Between BTC and BCH

Feature Comparison Matrix

Implementation Differences in go-crypto-wallet

Quick Reference Tables

Address Type Selection Guide

Multisig Selection Guide

Transaction Size Comparison (2-of-3 Multisig)

Network Parameters

Related Documentation

Project-Specific Guides

External References