BIP idea: Timelock-Recovery storage format

This concept seeks to address the security concerns and logistical challenges associated with storing recovery seeds for Bitcoin, especially in terms of inheritance and long-term access. Oren's proposal includes the creation of two types of transactions: an Alert/Initiate Transaction and a Recovery Transaction. The former aims to consolidate funds while facilitating Child Pays for Parent (CPFP) acceleration through minimal transfers to anchor addresses. The latter is designed to transfer Bitcoin from the consolidated Unspent Transaction Output (UTXO) to secondary wallets after a relative locktime, giving users time to react.

A significant development in this domain is the integration of the Timelock Recovery plugin into Electrum from version 4.6.0b1, which simplifies the process of signing these specialized transactions. This plugin allows for the generation of detailed instructions in PDF format for less tech-savvy users or in JSON format for a standardized approach that would ensure compatibility across various wallets and enable the monitoring and initiation of timelock-recovery plans. Oren emphasizes the need for standardizing the JSON format to include essential transaction details such as raw data, user information, and specific metrics to foster wider adoption and functionality. The initiative has received backing and development support from RITREK.com, highlighting the collaborative effort within the Bitcoin community to enhance wallet security and usability over long periods.

Furthermore, Oren addresses technical challenges and considerations related to the proposed BIP, including issues with the 'testmempoolaccept' RPC call concerning transactions with nSequence relative-locktime and the necessity for a feature in Core to test transactions under conditional settings. He also acknowledges the redundancy in specifying alert_inputs alongside alert_tx in the JSON structure but justifies it as a means of facilitating user review and verification processes. Additionally, Oren mentions the limitation imposed by BIP-68 on the maximum duration of the relative-locktime, capping it at 388 days, but notes that users can select shorter windows based on their needs.

Lastly, Oren highlights a broader issue with hardware wallets not displaying custom nSequence fields to users, potentially allowing malicious entities to manipulate these fields. He suggests that as part of ensuring the validity and safety of pre-signed transactions, users should verify these values directly on their hardware wallets. His contributions to the Specter-DIY project aim to improve transparency and user control over these critical parameters, advocating for similar enhancements across other wallet platforms.