With Privy, you can create Bitcoin (segwit) wallets and sign over transactions and any other arbitrary input. See the Tier 2 section for more details. Taproot wallets are coming soon.

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Signing transaction inputs

Bitcoin uses the UTXO model, where each transaction consumes one or more inputs and produces one or more outputs. To sign a transaction using Privy, use Privy’s raw sign functionality to sign each input hash, and then add the signature(s) to the transaction.

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Example

The following is an example using the scure/btc-signer library to sign a transaction input. 
import { p2pkh, OutScript } from "@scure/btc-signer/payment";
import {
  getInputType,
  getPrevOut,
  Transaction,
} from "@scure/btc-signer/transaction";
import { concatBytes } from "@scure/btc-signer/utils";
import secp256k1 from "secp256k1";

const publicKey = "<the wallet's public key>";

const publicKeyBuffer = Buffer.from(publicKey, "hex");
const tx = new Transaction({ version: 1, allowLegacyWitnessUtxo: true });
// add as many outputs as needed, in this example there is only one
tx.addOutputAddress(outputAddress, outputAmount);

tx.addInput({
  txid, // buffer of utxo txid
  index: 0, // index of the output in the tx
  witnessUtxo: {
    amount: inputAmount,
    script: p2pkh(publicKeyBuffer).script,
  },
});

// Loop through each input and sign it
for (let i = 0; i < tx.inputsLength; i++) {
  const input = tx.getInput(i);
  const inputType = getInputType(input, tx.opts.allowLegacyWitnessUtxo);
  const prevOut = getPrevOut(input);
  let script = inputType.lastScript;
  if (inputType.last.type === "wpkh") {
    script = OutScript.encode({ type: "pkh", hash: inputType.last.hash });
  }
  const hash = tx.preimageWitnessV0(
    i,
    script,
    inputType.sighash,
    prevOut.amount
  );

const signature = // call Privy's raw sign function with bytesToHex(hash), returns '0x...'

  // convert to DER format
  const derSig = secp256k1.signatureImport(signature);

  // update the input with the signature
  tx.updateInput(
    i,
    {
      partialSig: [
        [publicKeyBuffer, concatBytes(derSig, new Uint8Array([inputType.sighash]))],
      ],
    },
    true
  );
}

// finalize the transaction. It is now ready to be sent!
tx.finalize();