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Bitcoin Covenants

Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 9604)

Abstract

This paper presents an extension to Bitcoin’s script language enabling covenants, a primitive that allows transactions to restrict how the value they transfer is used in the future. Covenants expand the set of financial instruments expressible in Bitcoin, and enable new powerful and novel use cases. We illustrate two novel security constructs built using covenants.

The first, vaults, focuses on improving the security of private cryptographic keys. Historically, maintaining these keys securely and reliably has been a critical vulnerability for Bitcoin users. We show how covenants enable vaults, which disincentivize key theft by preventing an attacker from gaining full access to stolen funds.

The second construct, poison transactions, is a generally useful mechanism for penalizing double-spending attacks. Bitcoin-NG, a protocol that has been recently proposed to improve Bitcoin’s throughput, latency and overall scalability, requires this feature. We show how covenants enable poison transactions, and detail how Bitcoin-NG can be implemented progressively as an overlay on top of the Bitcoin blockchain.

Keywords

Script Language Consensus Protocol Standard Block Logical Location Script Program 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Notes

Acknowledgments

The authors thank Glenn Willen for useful conversations, Tim Ruffing and Dominique Schröder for their advice on cryptographic primitives, and the anonymous reviewers for their valuable feedback.

This material is based upon work supported by a fellowship within the FITweltweit programme of the German Academic Exchange Service (DAAD), the German Bundesministerium für Bildung und Forschung (BMBF) under grant agreement No. 13N13505, and the National Science Foundation under Grant No. CNS-1518779 and Grant No. CNS-1561209. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the funding organizations.

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Copyright information

© International Financial Cryptography Association 2016

Authors and Affiliations

  1. 1.Department of Information SystemsUniversity of MünsterMünsterGermany
  2. 2.Initiative for Cryptocurrencies and Contracts (IC3), Computer Science DepartmentCornell UniversityIthacaUSA

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