Pay-to-Script-Hash Address

Overview

Meaning and scope

A Pay-to-Script-Hash address, or P2SH address, is a Bitcoin destination that commits to the hash of a redeem script rather than exposing the complete spending conditions in the address. The spender later provides the redeem script and the data needed to satisfy it. P2SH improved compatibility for multisignature and other script-based payments, but the address format alone does not reveal the script’s rules before spending.

Mechanism and operation

A Pay-to-Script-Hash Address lets a payer send funds to a compact address while the recipient defines more complex spending conditions. In Bitcoin’s P2SH design, the address encodes a hash of a redeem script. The locking script checks that the revealed script matches that hash, then evaluates the signatures, timelocks, or other conditions contained in the redeem script. This design shifted the burden of complex script construction from the sender to the recipient. A merchant could publish one address representing a Multisignature Address, escrow rule, or recovery policy, while ordinary wallet software created a standard-looking output.

Practical payment example

A Bitcoin payer sends funds to a script-hash output. The receiving wallet knows the redeem script required to spend the funds; a merchant checks ownership using the configured script rather than guessing from the address format.

Operational checks

When spending, the recipient reveals the script and the data needed to satisfy it, making the policy visible at that time. Bitcoin also supports native SegWit and Taproot output forms, each with different encoding and fee characteristics. A script address is likewise not the same as a smart-contract account on an account-based chain.

Distinctions and limits

The payer does not need to know the full policy when creating the payment. The term should not be treated as a universal address type across all blockchains.

Related reading

Related definitions: Address, Multisignature Address.