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Covenants being used to create a whitelist-coin was a big concern when the covenant debate restarted a few years ago. After it was debated for months, the general sentiment settled on the concern being unsubstantiated. About to go to bed, I’m gonna try to write up an example for a covenant tomorrow after the Optech Recap.
The main thing to consider when thinking about whether covenants can or will be used to make a government whitelist or whatever is whether any given covenant construction is superior for that function than the existing 2-of-2 multisig that bitcoin already supports.
To date, assuming that I'm an evil government wanting to restrict the usage of bitcoin, the BEST way to do so is to require custodians to only allow withdrawals to 2-of-2 multisigs with my cosigner as the 2nd party. Now no user can spend without my permission and I can check every transaction for whatever conditions I want. Every covenant idea from CTV to TXHASH to CCV is inferior to a multisig for me the evil government.
Also keep in mind when thinking about the above that any covenant related whitelist would have the same problem as the above which is that I the recipient would have to include the condition (whether additional signer or covenant) in my receive address. Bitcoin, no matter how modified, does not have any concept of sender-added-conditions for receive addresses. For more on that, see here: https://x.com/reardencode/status/1757481697460072808
Just checking, you have already read this thread by Robin Linus? https://delvingbitcoin.org/t/perpetually-kycd-coins-using-evil-covenants/556
Looking forward to that!
My comment may have come off as tone deaf, I'm realizing. I do understand the basics of bitcoin transactions, but a covenant script is unfamiliar to me.
I'm trying to think about what it would be used for, about which I can see there have been huge efforts to explain, but I encounter heaps of technical jargon that I don't understand when I try to engage. Not from you, though. It is really interesting that the people who do understand, and whose opinion actually matters seem to have their own preferences based on the techanical merits and pitfalls of each proposal.
Fwiw, I hadn't ever read up on these nor paid attention to any commentary before reading this webpage and I was just pointing out that the language sounds CBDC-esque, put in that way. Maybe it isnt just me, since you and nerd2 sought to clarify the point as well. Is it a common FUD?