"Recursive covenant" with CTV and CSFS

The recent discussions on the Bitcoin Development Mailing List have shed light on the nuanced aspects of implementing CheckTemplateVerify (CTV) and CoinSwap Fixed Sequences (CSFS) within Bitcoin's scripting capabilities. The conversation, initiated by Antoine Poinsot, delves into the technical intricacies and potential applications of these features, emphasizing their impact on Bitcoin's security and functionality.

The discourse begins with an exploration of the "fully-enumerated" safety attribute provided by CTV during the selection phase of the scriptPubKey. It is highlighted that without incorporating the CTV hash directly into the scriptPubKey, the protective benefits of CTV are forfeited. This limitation underscores the necessity of including the CTV hash in the scriptPubKey to leverage its full potential. Furthermore, Poinsot introduces a scenario where not deleting the CSFS private key could enable future modifications, such as swapping in alternative hashes or signatures. This possibility opens the door to creating unbounded state machines, which can be dynamically updated through a master key. Although this concept presents intriguing prospects, the practical applications and implications remain uncertain.

Moreover, the discussion touches upon the anticipated integration of Simplicity—a high-level language designed for expressing smart contracts—into the Liquid sidechain, as indicated by a pull request on GitHub (ElementsProject/elements/pull/1427). This development signifies a pivotal step toward enhancing Bitcoin's scripting capabilities and expanding its use cases.

In addressing the broader context of Bitcoin development, Poinsot critically examines the concept of the "Overton window" within this domain. This notion, borrowed from political theory, refers to the range of ideas permissible for public discourse. Applying this concept to Bitcoin, Poinsot argues against restricting discussion to only those ideas deemed palatable by the prevailing consensus, asserting that such limitations are antithetical to the ethos of decentralization and innovation that Bitcoin champions.

The correspondence also contemplates the efficacy of small versus large changes within Bitcoin’s protocol. While smaller, incremental updates may seem less impactful, they necessitate a consensus from the global Bitcoin community, potentially stifling rapid innovation. This reflection prompts a reevaluation of how changes are proposed and implemented within the Bitcoin network, urging a balance between maintaining security and fostering innovation.

In summary, the dialogue encapsulates a deep dive into the technical, philosophical, and strategic considerations surrounding Bitcoin development. It underscores the complexity of integrating new features like CTV and CSFS, the potential of Simplicity in broadening Bitcoin's capabilities, and the critical examination of how the community navigates change and innovation.