On the possibility of evil covenants and implications for soft fork proposals

The regret expressed over introducing the term "covenant" and its subsequent misuse underscores a significant concern within the programming community. Originally intended to enhance understanding, the concept has instead been appropriated to instigate fear and deception. This manipulation of the covenant idea highlights a fundamental issue: the potential for abuse does not justify restricting freedom. The discourse reveals that the consensus rules unintentionally facilitate arbitrary programmatic covenants, suggesting that any attempt to completely prevent such flexibility would be overly restrictive and unnecessary. This is because malign actors can achieve their objectives through simpler means like multisig or undetectable threshold signatures without needing the slight advantages offered by more autonomous systems. Moreover, these systems tend to incur higher transaction costs, a detriment not borne by non-coercive applications thanks to consensual key path joint signatures.

The dialogue further explores the double-edged nature of covenants. While malevolent use of covenants can somewhat be replicated with multisig solutions—albeit with some loss of uptime for the adversary—genuine covenant applications also face additional security risks. This implies a near symmetry in the practicality of using covenants versus multisig setups, although with distinct trade-offs for each. It raises an important critique of proposals advocating for increased functionality akin to what multisig oracles could emulate; such proposals ought to justify their necessity convincingly, especially when their applications remain speculative or serve controversial purposes like enabling the creation and trade of competing cryptocurrencies on Bitcoin's platform.

The emphasis lies in the argument that utility and efficiency are best realized when they align closely with actual, concrete usage rather than speculative aspirations. The speculative desire to mint and trade alternative currencies on Bitcoin's network is particularly criticized for lacking appeal to Bitcoin users, highlighting a broader issue: without tangible, convincing applications, there's a tendency for the community to focus on the less reasonable or speculative potentials of new technologies. This perspective advocates for a more grounded approach to innovation, where the legitimacy and utility of new functionalities are proven through real-world application and necessity rather than theoretical or speculative ambition.