Opinion on Covenants? \ stacker news ~bitcoin

4543 sats \ 35 comments \ @deerwhisper 19 Dec 2023 bitcoin

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

Strongly For21.8%

For21.8%

Neutral9.2%

Against4.6%

Strongly Against5.7%

Don't know / Need more info36.8%

87 votes \ poll ended

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1305 sats \ 10 replies \ @benthecarman 19 Dec 2023

We either get covenants or only rich people can do self custodial bitcoin

0 sats \ 0 replies \ @rhombus 20 Dec 2023

You covenant shills are one step away from "Think of the children" style responses.

0 sats \ 1 reply \ @ek 20 Dec 2023

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).

0 sats \ 0 replies \ @benthecarman 20 Dec 2023

OP_VAULT is a covenant

0 sats \ 0 replies \ @ek 20 Dec 2023

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0 sats \ 5 replies \ @itsrealfake 20 Dec 2023

where can i learn more about the reasoning behind this assertion ?

15 sats \ 1 reply \ @benthecarman 20 Dec 2023

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

0 sats \ 0 replies \ @itsrealfake 20 Dec 2023

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?

131 sats \ 0 replies \ @patrick1 20 Dec 2023

We need covenants for non-custodial, non-interactive L2s.

11 sats \ 1 reply \ @om 20 Dec 2023

Check out channel factories

0 sats \ 0 replies \ @itsrealfake 20 Dec 2023

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.

132 sats \ 2 replies \ @franzap 19 Dec 2023

"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!

0 sats \ 1 reply \ @itsrealfake 20 Dec 2023

who said this?

1 sat \ 0 replies \ @franzap 20 Dec 2023

sethforprivacy

1001 sats \ 4 replies \ @piecover 20 Dec 2023

Where is the testnet?

3 sats \ 0 replies \ @itsrealfake 20 Dec 2023

Covenants still don't sit right with me

What prevents an exchange from being told to only receive coin into covenant?

0 sats \ 1 reply \ @om 21 Dec 2023

Liquid

0 sats \ 0 replies \ @piecover 21 Dec 2023

Not sure about that

0 sats \ 0 replies \ @itsrealfake 20 Dec 2023

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121 sats \ 0 replies \ @gd 20 Dec 2023

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.

344 sats \ 0 replies \ @designsats 19 Dec 2023

let Litecoin do it first :P

1 sat \ 10 replies \ @itsrealfake 19 Dec 2023

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).

433 sats \ 5 replies \ @benthecarman 19 Dec 2023

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.

0 sats \ 4 replies \ @itsrealfake 20 Dec 2023

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.

159 sats \ 3 replies \ @benthecarman 20 Dec 2023

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

0 sats \ 2 replies \ @itsrealfake 20 Dec 2023

What's to prevent Uncle Gov from demanding that the exchange opt into a covenant at their wallet?

0 sats \ 1 reply \ @21HunnyBilly 4 Jan

Nothing prevents Uncle Gov from demanding you use their KYC fork of bitcoin either.

0 sats \ 0 replies \ @itsrealfake 4 Jan

it could be seen as serving the interests of such a hypothetical uncle gov to fork:

confuse the information space e.g. "yeah i heard bitcoin is forking a bunch, USDC is probably easier for me to use for now"
fork fail scenario == pump & dump, worst case

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

10 sats \ 1 reply \ @21HunnyBilly 19 Dec 2023

Encumberance happens on the receiving software.

This is effectively the same attack as requiring KYC for all transactions, no covenants needed.

1 sat \ 0 replies \ @itsrealfake 20 Dec 2023

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0 sats \ 1 reply \ @patrick1 20 Dec 2023

Why hasn't anyone added such encumbrances on Ethereum? I don't think this is actually a big threat.

0 sats \ 0 replies \ @itsrealfake 20 Dec 2023

because ethereum is already controlled territory.

0 sats \ 2 replies \ @CUMDUMPSTER 19 Dec 2023

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100 sats \ 0 replies \ @netstatic 20 Dec 2023

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

0 sats \ 0 replies \ @deerwhisper OP 19 Dec 2023

I wasn't around for those discussions (but this would've become a problem at some point anyways imo)