Algebra Puzzle - Nested Segwit P2SH-P2WSH

To follow along this tutorial

Clone the Github repository
cd code
npm install or yarn install
Execute the transaction code by typing node tx_filename.js
Alternatively you can enter the commands step-by-step by cd into ./code then type node in a terminal to open the Node.js REPL
Open the Bitcoin Core GUI console or use bitcoin-cli for the Bitcoin Core commands
Use bx aka Libbitcoin-explorer as a handy complement

Learn more:

P2WSH nested in BIP16 P2SH

Let’s create a simple maths puzzle with an embedded Segwit P2SH-P2WSH transaction.

Creating and Funding the P2SH-P2WSH

Import libraries, test wallets and set the network

const bitcoin = require('bitcoinjs-lib')
const { alice } = require('./wallets.json')
const witnessStackToScriptWitness = require('./tools/witnessStackToScriptWitness')
const network = bitcoin.networks.regtest

Create the witness script and generate its address.

const witnessScript = bitcoin.script.compile([
  bitcoin.opcodes.OP_ADD,
  bitcoin.opcodes.OP_5,
  bitcoin.opcodes.OP_EQUAL])

console.log('Witness script:')
console.log(witnessScript.toString('hex'))

You can decode the script in Bitcoin Core CLI.

decodescript 935587

Create the P2SH address.

const p2wsh = bitcoin.payments.p2wsh({redeem: {output: witnessScript, network}, network})
const p2sh = bitcoin.payments.p2sh({redeem: p2wsh, network: network})
console.log('P2SH Address:')
console.log(p2sh.address)

Send 1 BTC to this P2SH address.

sendtoaddress 2MwnRrQxKhCdr8e3vbL7ymhtzQFYPTx9xww 1

This 1 btc is the reward for whoever as the solution to the locking script.

We can note that anyone can create this script and generate the corresponding address, it will always result in the same address.

Generate one block to dave_1’s P2WPKH address so that we can spend the UTXO.

generatetoaddress 1 bcrt1qnqud2pjfpkqrnfzxy4kp5g98r8v886wgvs9e7r

Get the output index so that we have the outpoint (txid / vout).

gettransaction TX_ID

Find the output index (or vout) under vout.

Preparing the spending transaction

Now let’s prepare the spending transaction by setting input and output.

Alice_1 wants to send the funds to her P2WPKH address.

Create the PSBT by filling TX_ID and TX_OUT.

const psbt = new bitcoin.Psbt({network})
  .addInput({
    hash: 'TX_ID',
    index: TX_VOUT,
    witnessUtxo: {
      script: Buffer.from('a914' +
        bitcoin.crypto.hash160(p2wsh.output).toString('hex') + (1)
        '87', 'hex'),
      value: 1e8,
    },
    witnessScript: Buffer.from(witnessScript, 'hex')
  })
  .addOutput({
    address: alice[1].p2wpkh,
    value: 999e5,
  }) (2)

1	Hash160 of the current transaction asm scriptSig, inside a standard P2SH template
2	Output, leaving 100 000 satoshis as mining fees

Finalizing the PSBT

We can now finalize the transaction. The scriptSig field will receive the version byte 0 and the witness program (sha256 hash of the witness script). The input will also contain a witness stack, composed of the solution to our math problem, and the math problem itself (witness script).

We provide 02 and 03 as an answer satisfying the witness script.

Finalize the PSBT.

const getFinalScripts = (inputIndex, input, script) => {
  // Step 1: Check to make sure the meaningful locking script matches what you expect.
  const decompiled = bitcoin.script.decompile(script)
  if (!decompiled || decompiled[0] !== bitcoin.opcodes.OP_ADD) {
    throw new Error(`Can not finalize input #${inputIndex}`)
  }

  // Step 2: Create final scripts
  const payment = bitcoin.payments.p2sh({
    redeem: bitcoin.payments.p2wsh({
      redeem: {
        output: script,
        input: bitcoin.script.compile([bitcoin.opcodes.OP_2, bitcoin.opcodes.OP_3]), (1)
      }
    })
  })

  return {
    finalScriptSig: payment.input,
    finalScriptWitness:
      payment.witness && payment.witness.length > 0
        ? witnessStackToScriptWitness(payment.witness)
        : undefined
  }
}

psbt.finalizeInput(0, getFinalScripts)

1	The condition that unlocks the witness script

We don’t need to sign this transaction since the witness script doesn’t ask for a signature.

Extract the transaction and get the raw hex serialization.

console.log('Transaction hexadecimal:')
console.log(psbt.extractTransaction().toHex())

Inspect the raw transaction with Bitcoin Core CLI, check that everything is correct.

decoderawtransaction TX_HEX

Broadcasting the transaction

It’s time to broadcast the transaction via Bitcoin Core CLI.

sendrawtransaction TX_HEX

Inspect the transaction.

getrawtransaction TX_ID true

Observations

In the vin (input) section, we note that the scriptSig contains a 0 version byte and a witness program, which is the SHA256 32-bytes hash of the witness script.

The only stack item in scriptSig <0 <32-byte-hash>> (Serialized version byte + witness program) is hashed with HASH160, compared against the 20-byte-hash in the locking script of the P2SH UTXO we are spending.

bitcoin.crypto.hash160(p2wsh.output).toString('hex')
// '31c74d4132ecfdb577695cd23be18346f048cb24'

The scriptSig is then sent to the execution stack again as two separate elements. Since the version byte is 0 and the witness program is 32 bytes it is interpreted as a P2WSH program. This triggers the execution of the witness stack.

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