Numerous outstanding Bitcoin specialists, together with Adam Again, Jimmy Music and Andreas Antonopoulos, have raised some issues over the implementation of restrictive covenants, particularly with the BIP119.
Particularly, Antonopoulos has voiced issues over “recursive covenants” that the brand new replace may convey, thereby deteriorating the community. A recursive covenant happens when a programmer restricts a transaction, however he does it in a manner that restricts one other transaction after that, beginning a domino impact leading to future limitless recursive covenants.
Blacklisting and dangers of censorship and confiscation
Whereas locking up the place a Bitcoin could be spent is advantageous to make sure extra safety, it additionally supplies grounds for censorship, and management by governments, which might hinder the very existence of Bitcoin. Authorities may probably drive exchanges to withdraw solely to covenants with some management over the coin.
Whereas this similar threat already exists, since governments can ask exchanges to ship solely to addresses with a taproot spend path or multi-sig managed by them, may the implementation of covenants facilitate malicious functions the place it will make it simpler for governments to implement a type of on-chain KYC?
Covenants would possibly intrude with Bitcoin’s fungibility — the power of every Bitcoin to be equivalent in operate and high quality.
Whereas helpful for safety and scalability, covenants would change the properties of particular Bitcoin models, basically creating various kinds of digital forex, distinct in line with what might be spent or the place it might be despatched.
Because of this, those that oppose the change argued that limiting how one can spend your Bitcoin would finally restrict Bitcoin’s use as a digital forex, with inevitable penalties in its worth.
There are sturdy opinions on covenants’ professionals and cons; nevertheless, debates are wholesome and needed to enhance a decentralized and leaderless community. Finally, the ultimate choice will likely be all the way down to the customers and node operators who will obtain the software program that higher displays their viewpoint.