Pay to Script Hash

The five-minute read

One action, walked through

1. Open BIP 16 and read the status line before the examples.
2. Write down the rule in one sentence. A fair version of that sentence is: A new "standard" transaction type for the Bitcoin scripting system, and defines additional validation rules that apply only to the new transactions.
3. Name the object that changes: OP_HASH160, OP_EQUAL.
4. Ask what an old client, an old contract, or an offline counterparty does. If the document is silent, the silence is part of the design.

The argument, unpacked

What has to be true

• You are implementing BIP 16 at the status the text itself states: Deployed.
• The object that has to change is OP_HASH160, OP_EQUAL. A neighbouring document with a similar name is not this one.
• Activation is a separate mechanism from the opcode or the sighash. This page does not pick a height.

What happened after the paper

The source marks this deployed. That is a statement about the text, not a promise that every wallet or node has shipped it. Later documents can narrow, replace, or ignore this one. Cite the number you mean.

What to check before you use the idea

• Which bytes become invalid under Pay to Script Hash, and which old transactions stay valid?
• Is enforcement in consensus, or only in the mempool policy of one client?
• Which of these objects does the text actually define: OP_HASH160, OP_EQUAL?

Terms

BIP 16

The public text titled Pay to Script Hash.

Deployed

The document's own label for how finished the text is. It is not a market fact.

The problem the paper names

Bitcoin script and block validity only change when a soft fork says an old pattern is now invalid. Without that rule, every node is free to accept what this document wants to reject.

What the design proposes

• A new "standard" transaction type for the Bitcoin scripting system, and defines additional validation rules that apply only to the new transactions.
• The purpose of pay-to-script-hash is to move the responsibility for supplying the conditions to redeem a transaction from the sender of the funds to the redeemer.
• The benefit is allowing a sender to fund any arbitrary transaction, no matter how complicated, using a fixed-length 20-byte hash that is short enough to scan from a QR code or easily copied and pasted.

How the mechanism is specified

• Taken from the specification, the next constraint is: The purpose of pay-to-script-hash is to move the responsibility for supplying the conditions to redeem a transaction from the sender of the funds to the redeemer.
• Locate OP_HASH160, OP_EQUAL in BIP 16 and apply it to one transaction or call.
• Then check the failure the class of rule always has: a node that did not upgrade, a reverted call, a replayed signature, or a peer that does not speak the message.

What this page does not treat as proven

• A soft fork does not bind a node that never upgrades. It binds the nodes that enforce the new rejection.
• Activation is a separate mechanism from the opcode or the sighash. This page does not pick a height.
• The source marks this deployed. That is a statement about the text, not a promise that every wallet or node has shipped it.

Why a venture studio still reads it

Use BIP 16 when a pitch says 'Pay to Script Hash' without saying whether the rule is consensus, policy, or an interface. The number is the citation. The pitch is not.