Have you fallen into the ‘rabbit hole’ of covenants?

Interviewer: Hua, freelance writer, independent researcher. X: @AmelieHua

Interviewee: Poly, a Controls Specialist, maintains multiple Distributed Control Systems (DCS’s) and has worked with other five nine systems (99.999% uptime availability). X: @Polyd_

Covenants are an old yet fresh topic. As early as 2013, developers began discussing this topic, and in recent years, multiple BIPs aimed at implementing covenants have been proposed, sparking intense debates and making it one of the hottest topics.

Covenants warrant serious discussion due to their powerful capabilities. They are considered to bring new possibilities to the programmability of Bitcoin and are believed to enable smart contracts. For Bitcoin, this is undoubtedly a double-edged sword. In this article, we will explore what covenants are, how they work, their robust functionality, and their significance for Bitcoin. While discussing details, this article often uses CTV as an example, but CTV is not the only method of implementing covenants.

This article delves into the exploration of covenants but also magnifies a slice of Bitcoin under a microscope for observation. Through this observation, we can understand how Bitcoin operates at a granular level, comprehending both its capabilities and limitations. Understanding what it cannot do is as crucial as understanding what it can do because only then can we choose the right path for building on Bitcoin.

1.

Hua:

Before discussing covenants, clarifying two issues related to Bitcoin may be necessary, which can help us better understand covenants.

We know that Bitcoin uses a scripting language, and it is known that scripting languages support the implementation of smart contracts. However, in reality, smart contracts have not been implemented on the Bitcoin main chain. This inevitably creates a sense that implementing smart contracts on Bitcoin faces some insurmountable obstacles, and it seems impossible on the Bitcoin network.

However, many people may not be aware that although Bitcoin can be programmed using a scripting language, the set of opcodes is extremely limited. This limited set of opcodes restricts the programmability scope of Bitcoin, meaning that, although the scripting language can implement smart contracts, programmers do not have sufficient “tools” to implement smart contracts.

Poly:

Definitely, Bitcoin Script can be considered limiting as it can only perform the basic operations such as making simple payments. Some of the reasons that people may find it “limiting” is that it doesn’t have a global state, it’s not considered turing complete, it uses a UTXO-based system (which has “value blindness”) instead of an account-based system. The last big reason is that very little data from the blockchain itself can be integrated into contracts causing blockchain-blindness.

This has created a lot of challenges over the years as people have worked around these limitations….



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