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What is P2SH? (Explained)

This is an interesting story, of how a digital creator that remained anonymous to date managed to create an entity that led the world to new heights. We are talking about bitcoin and its derivatives that right from its invention in 2010 marked its presence in the market and set up in such a way that no other can beat the legacy. A programmer named Satoshi Nakamoto in the earlier phase of the previous decade came up with an idea whose purpose was to end the monopoly of fiat currency and banknotes in the economic structure. He wanted to create such an entity that can replace the coins and leadership of prime banks from the market. As a result, Bitcoin came into existence as a substitute for fiat currency and it easily managed to secure a prime place in the market in the next decade. If you intend to invest in bitcoin, create bitcoin trader account here.

Today, there will be hardly any person that has not heard about bitcoin or the word cryptocurrency. Bitcoin is the most widely used and equally popular crypto asset that has its position on the top of the list of cryptocurrencies. Bitcoin came up with many new terms along with its induction into the market. Those terms were blockchain and mining. Along with it, the other terms were algorithms, hash rates, and many more. In this article, we are going to discuss one such technology that is associated with bitcoin and is popularly known as P2SH.

It is the short form for Pay to ScriptHash. It is a technology that helps the user when he makes a transaction involving bitcoin. With the help of this technology, he can easily manage to lock the bitcoins in some part of the algorithm and will expose the full or original part only when the transaction requires to do so. With the help of this technology, only some specific information may be shared first hand thereby allowing the customer to share the transaction with some entities conventionally and only sharing the full details when he thinks it is necessary to do so. Bitcoin along with other cryptocurrencies started using the feature of P2SH right from the beginning of the year 2012.

The public key associated with the transaction is not exposed using this transaction so it adds up to your security while making the transaction. Transactions are made to pass a hash test and are sent to the script hash. Thus, the transaction is sent to that address that starts with three ECDSA rather than one.

Advantages of using P2SH

There are several advantages of using this technology of which some are summarized here.

Multi-signature address

With the adoption of P2SH, it is easy to use multi-signature addresses for making and receiving transactions. The design of P2SH is such that it is easy for the signatures to be equal to or less than the other number of keys. Usually, the keys associated with this technology are three.


The security of P2SH is unquestionable. Along with security, the privacy that it offers is unbeatable. It is only due to these facts that people around the world are adopting this concept. The scripts and transaction details that are shared here are very secure and as a result, there is no chance of breaching the private information of the parties.

Cheaper rates of charge The fees that the platform charge for making and posting the transactions is very less and nominal. As a result, the commission rates are also less. The partial sharing of the script allows customers to pay for only that part of the transaction. The charges are thus saved which would be applicable if the full script is shared.

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