Bitcoin Covenants Part 1: Exploring New Possibilities for Complex Spending Conditions on the Bitcoin Network
Covenants are proposed Bitcoin features that would let users restrict how coins can be spent in future transactions. They could enable trust-minimized Layer 2s, non-custodial vaults, and more efficient payment channels. Most covenant designs need a Bitcoin soft fork, which is politically difficult amid growing disagreement among consensus client communities and broader calls for protocol ossification. Bitcoin Script already supports signatures, timelocks, hash preimages, and logical combinations of these, but it cannot enforce rules about where funds must go after a valid spend. Covenants would add that missing ability. The idea dates back to Gregory Maxwell in 2013 and has since evolved into many proposals. A key distinction is between basic and general covenants. Basic covenants constrain only the next transaction, though they can be chained to predefine a finite sequence of spends. General covenants would recursively preserve spending restrictions across unlimited future transactions, offering more power but also much higher technical and governance hurdles.
