OP_CAT + OP_CTV = recursive #covenants = immutable on-chain KYC for #Bitcoin
Seriously, who can be in support of this?
Discussion
All that can be done already with multisig. And as with multisig the recipient is the one generating the receiving address. You can't force me to generate recursive covenants as receiving address any more than generating multisig with you as a recevng address. And the alternative without L1 development is that most people will use custody. Custody = we are back at KYCed permissiones banks.
Enforcing KYC check through a multisig provides less flexibility than through a #covenant. It’s true that no one can force you to generate a recursive covenant for your self-hosted #Bitcoin but any outputs that at any point in time will touch a regulated entity (exchange, ETF, corporation etc.) will be required to generate a recursive covenant enforcing KYC check to send the coins out. This means that the Bitcoin network will see an ever growing share of its supply being compliant with on-chain KYC. You can keep holding your non-KYC #BTC but these won’t be fungible with KYC addresses. The liquidity of your assets will decrease over time with the risk of seeing two exchange rates, one for KYCed bitcoins and one for non KYCed bitcoins. The only way your bitcoins will be usable is through a circular economy that is accepting non-KYC bitcoins.
If you want more programmability for your #Bitcoin without compromising the integrity of the base layer, then #drivechains are a good solution.