CTV + CSFS: a letter

The discussion revolves around the implementation and practical challenges of using covenant functionality in Bitcoin through presigned transactions and ephemeral key material. The concept, though technically feasible, faces significant obstacles when applied to real-world scenarios, particularly in maintaining security and operational efficiency. Presigned transactions require frequent updates to a user's vault scheme to reflect changes in Unspent Transaction Outputs (UTXOs), complicating the process further in multisignature setups with keys distributed across various locations. Ephemeral keys introduce another layer of complexity, as they depend on the user's ability to securely erase key material, a task fraught with its own set of difficulties.

Furthermore, the use of presigned transactions for creating vaults, intended to enhance security by allowing funds to be swept to an emergency address if key material becomes inaccessible, does not address the issue when key material is compromised. Vaults are designed to enable users to recover from situations where a threshold of signing keys has been compromised, highlighting a critical gap in the utility of presigned transaction-based vaults for comprehensive security management. For more detailed insights into these challenges, the article "The Unsuitability of Presigned Transactions for Vaults" provides an in-depth analysis, available at delvingbitcoin.org. This exploration underscores the distinction between theoretical possibilities in digital currency security mechanisms and their practical applicability, emphasizing the need for solutions that bridge this gap effectively.