Don’t really like this part.
“So whereas in a “normal” Bitcoin script, we only require specific conditions to be met to unlock a particular requirement (sign a transaction with a private key, for example), in a covenant, we go a step further by restricting what you can do with that coin, or where a coin can be spent. “
https://cointelegraph.com/explained/what-are-bitcoin-covenants-and-how-do-they-work
To use a UTXO in a transaction, you have to meet its demands. Often this requires providing signatures (proof of keys) but it can also depend on other things such as the block height (check-lock-time-verify etc.). You, as recipient, encode these rules into the address you provide to the sender. You opt-in to the rules you want to apply.
“Covenants” allow you to opt in to more rules, such as where the funds can be spent to. It’s still opt-in. You choose to encumber your addresses or not. You can choose not to, just as you can choose not to use multisig.
Even if you choose not to use this feature, you benefit when others do so. Covenants allow denser use of block space, which means (all other things equal) lower fees as more can get done in fewer/smaller transactions.
Thank you for this. Interested to learn more (🐇🕳️). Wouldn’t this also mean exchanges and institutions could put restrictions on coins transferred to you from them? Is this a concern?
