Obviously had a lot of discussion going around about covenants in the last few weeks so I thought I'd see where the SN community is at on this subject.
I don't know much about them myself and don't feel strongly either way at the moment. Have yet to see anything that would make me outright reject the idea, but also believe in practicing conservatism with any proposed change to the base layer (default to rejection).
There seems to be a lot of different proposals on how to bring them to Bitcoin as well, which is adding to my confusion. Any insight/info/questions/concerns welcome to this post! I want to learn.
Linked a few things below relevant to the topic
https://covenants.info/ https://sethforprivacy.com/posts/dispelling-covenants-fud/ https://x.com/4moonsettler/status/1737113171582980413?s=20
We either get covenants or only rich people can do self custodial bitcoin
You covenant shills are one step away from "Think of the children" style responses.
Pardon my ignorance, but you're saying this because covenants is required for stuff like
OP_VAULT, right? Covenants is just the blanket term for anything that restricts utxos in any way, right? If so, that's also why I am pro covenants. Bitcoin is programmable money, we should make use of this feature (if it makes sense).OP_VAULT is a covenant
where can i learn more about the reasoning behind this assertion ?
look at lightning right now, we have maybe 0.1% adoption of bitcoin and fees are so high that it is unusable to use a self-custodial without putting a few thousand dollars to get around chain fees and channel reserves
you may have this sorted out for yourself, but it's not clear to me why 'looking at lightning' explains why only rich people get to self-custody if we don't signal for BIP119 in Jan 2024
could you at least pretend to steelman the case for even the smallest amount of concern against introducing a protocol-level mechanism for controlling how coins can be spent?
We need covenants for non-custodial, non-interactive L2s.
Check out channel factories
yeah, i've heard of this plan to spin up many thousands of channels in one transaction, and we can't have a LN address for every person on chain right now because every person requires one transaction to spin up a channel.
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"Preventing the immense positives that covenants bring for self-custody, self-custodial Lightning, privacy, and further scaling for a vague governmental attack that is more easily done without covenants makes no sense to me."
Exactly this!
who said this?
sethforprivacy
Where is the testnet?
Covenants still don't sit right with me
What prevents an exchange from being told to only receive coin into covenant?
What prevents an exchange from only receiving coin into a covenant is the same thing that prevents exchanges from not allowing withdraws. People don't use exchanges they can't withdraw from (unless you're an ETF numb skull)
I've also seen "wallets" that prevent you from sending to an address that isn't an exchange. We just don't use those wallets because they suck.
Liquid
Not sure about that
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I really need to get up to speed on the technical changes. I’ve not spoken much about covenants because I don’t fully understand yet, but I see a lot of hand-waving replies when reading discussions. These comments included, I guess.
let Litecoin do it first :P
My concern is that if covenants are introduced powerful actors will coordinate to push coin into covenant designs which will not allow the coin to be used without meeting certain criteria (imagine on-chain morality police).
They can already do this with multisig or just custodial bitcoin. With custodial they have even more power and can rug pull and be fractional reserve, there's no reason they'd do it the 1000x more complicated way of covenants when they can do it with a custodial wallet.
I imagine a scenario where adding covenants unlocks the ability for Uncle Gov to order Cashapp to send all withdrawals through a covenant to a user.
that is not how it works, covenants are something you put inside of your wallet/address. unless you opt into it, they can't effect you
What's to prevent Uncle Gov from demanding that the exchange opt into a covenant at their wallet?
Nothing prevents Uncle Gov from demanding you use their KYC fork of bitcoin either.
it could be seen as serving the interests of such a hypothetical uncle gov to fork:
what does uncle lose for attempting at a fork?
maybe i'm completely dumb... my point in the parent is that: a) it's easier to get the exchange to engage w a forced covenant by the thumbscrews of access to banking services b) imagine the covenant which is written in such a way that only another covenant enforced wallet can be the receiver, receive.
a boa constrictor type situation. it's not hard to imagine this idea coming out of a scenario planning exercise, so it's reasonable to ask, at least.
@delete after 2 weeks
Encumberance happens on the receiving software.
This is effectively the same attack as requiring KYC for all transactions, no covenants needed.
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Why hasn't anyone added such encumbrances on Ethereum? I don't think this is actually a big threat.
They have a Turing complete programming language, they very well could make such things on there right now. They're just too busy looking for the next way to trick users into entering a program they won't read the code for and getting rekt from.
because ethereum is already controlled territory.
Covenants are important to bitcoin for many reasons. The short version is that they make many common processes in bitcoin more efficient, allows for Vaults and helps scale throughput on L2 and self-custody on L1.
I highly recommend the 2 articles below:
Why bitcoin needs covenants: https://blog.casa.io/why-bitcoin-needs-covenants/ How CTV can help scale bitcoin: https://bitcoinmagazine.com/technical/how-ctv-can-help-scale-bitcoin
And if you're a developer please voice your opinion here: https://en.bitcoin.it/wiki/Covenants_support
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segwit and taproot were both 2+ year features. None of them lead to the scenario now as you would know if you read the post made by sethforprivacy
I wasn't around for those discussions (but this would've become a problem at some point anyways imo)