Author: Anthony Towns 2021-07-05 05:04:21
Published on: 2021-07-05T05:04:21+00:00
The discussion around enabling covenants is centered on whether OP_CAT should be allowed or not. Multisig alone can enable recursive covenants, as a government could require that funds be deposited into a multisig of "2 2 CHECKMULTISIG" and that the recipient has gone through KYC. In this scenario, the government can refuse to sign with gov_key unless the funds are being spent to a new address that follows the same rules. This approach is already used by Liquid, which locks bitcoins into a multisig and enforces an off-chain covenant that those bitcoins can only be redeemed after some valid set of signatures are entered into the Liquid blockchain. BTC-on-Ethereum tokens and coins held in exchanges/custodial wallets also use similar approaches. In essence, escaping from this type of recursive covenant would require a change in signing policy by the government (or Liquid functionaries, or exchange admins). However, one could equally escape any consensus-enforced covenant by having a hard fork to stop doing consensus-enforcement. This difference appears to be more of a procedural and difficulty-based issue than a fundamental difference in kind.
Updated on: 2023-05-21T03:13:29.131110+00:00