Does my Bitcoin have a covenant attached to it?
2024-06-23 14:35:00 +07:00 by Mark Smith
This was a question raised in a recent What Bitcoin Did podcast episode with niftynei. The rest of their discussion around covenants is super interesting too, worth giving it a listen. The question is a variation of what I first thought of when I skimmed through the covenants proposal. I said so at the time on Twitter several months ago.
The basic idea of covenants is that you would have a way to attach conditions to bitcoins. It's an interesting primitive for sure, likely could lead to many useful application features. However it reaks of danger. You have a permissionless decentralised self sovereign digital money that works really well, why on earth would you risk adding permissions to it on the base layer? Surely you would run the risk of not being able to spend your bitcoin some time in the future?
In the podcast they bring up the example of attaching a time lock to some bitcoin, and the question then came up, how would you know if the Bitcoin you just received had conditions attached? Their answer is what I suspected. Essentially you wouldn't know unless your wallet had a feature to show you the covenant. So it's conceivable that you could keep bitcoin literally for years and only discover the covenant when you tried to spend the bitcoin.
They propose to create some sort of standards body for wallets, but as they discuss the idea it rapidly becomes a re-inventing-the-government problem because how do you create such an entity that is decentralised? It would be near impossible.
This is tangential to another problem I previously highlighted, namely that Bitcoin is way too obscure at a technical level. Crypto coins aren't easily explorable like HTTP and HTML. That's a big deal.
Anyway, it's an interesting episode, I'm glad they are at least talking about it, however it's clear there are elite and peasant classes forming in Bitcoin. That's a real shame, but it's also dangerous, no matter who you are.
Just read through the notes section on this website to discover first hand examples that the world is absolutely full of people that want nothing more than to block you from one thing or another.
You might be an elite today, but can you be so sure you'll be an elite next week, next year, in 20 or 100 years? Permissions are dangerous.