CS120: Bitcoin for Developers I

Prior to version 0.9.2 of the Bitcoin Core client, Pay-to-Script-Hash was limited to the standard types of bitcoin transaction scripts, by the IsStandard() function. That means that the redeem script presented in the spending transaction could only be one of the standard types: P2PK, P2PKH, or multisig.

As of version 0.9.2 of the Bitcoin Core client, P2SH transactions can contain any valid script, making the P2SH standard much more flexible and allowing for experimentation with many novel and complex types of transactions.

You are not able to put a P2SH inside a P2SH redeem script, because the P2SH specification is not recursive. Also, while it is technically possible to include RETURN (see Data Recording Output (RETURN)) in a redeem script, as nothing in the rules prevents you from doing so, it is of no practical use because executing RETURN during validation will cause the transaction to be marked invalid.

Note that because the redeem script is not presented to the network until you attempt to spend a P2SH output, if you lock an output with the hash of an invalid redeem script it will be processed regardless. The UTXO will be successfully locked. However, you will not be able to spend it because the spending transaction, which includes the redeem script, will not be accepted because it is an invalid script. This creates a risk, because you can lock bitcoin in a P2SH that cannot be spent later. The network will accept the P2SH locking script even if it corresponds to an invalid redeem script, because the script hash gives no indication of the script it represents.

Warning: P2SH locking scripts contain the hash of a redeem script, which gives no clues as to the content of the redeem script itself. The P2SH transaction will be considered valid and accepted even if the redeem script is invalid. You might accidentally lock bitcoin in such a way that it cannot later be spent.