Proposed Bitcoin Vault feature could prevent malicious hackers

Bitcoin developer James O’ Beirne has been quietly working on a feature that alerts users when someone tries to steal their bitcoin, then prevents the theft by redirecting funds to a more secure wallet.

The feature is called a vault – a type of Bitcoin smart contract or “covenant” that places restrictions on how a bitcoin can be spent.

Vault users must broadcast two separate transactions in two different blocks before spending bitcoin (BTC). An alert is issued after the first transaction (which has a time delay), allowing users to either approve the transaction or sweep the coins to an alternate wallet.

The feature requires a soft fork – a backwards-compatible change to the blockchain – and, if adopted, will be represented by the opcode “op_vault” in Bitcoin Core, the primary software for connecting to the Bitcoin network.

“The danger of holding bitcoin is well known,” O’Beirne wrote in his draft proposal. “This proposal introduces a mechanism that significantly reduces the worst case of key compromise: coin loss.”

O’Beirne’s proposal is not the first of its kind. A couple of years ago, Bitcoin developer Jeremy Rubin proposed CheckTemplateVerify (CTV) under bitcoin improvement proposal (BIP) 119.

Similar to op_vault, CTV also uses pacts to create vaults. The key difference is that while O’Beirne’s proposal is designed specifically for vaults, CTV is a more general tool that can be used to create vaults, payment pools, and even reduce fees during periods of high transaction volume (a feature Rubin calls “congestion control ” “).

“CTV is more general than op_vault,” Bitcoin researcher John Light told CoinDesk in an interview. “You can still build a type of vault with CTV, but you can also do other things. You can do congestion control, you can do non-interactive Lightning channel opening. There are some different applications that Jeremy has experimented with using CTV that are not vault.”

For now, the fate of CTV is unclear. Rubin announced an indefinite hiatus from Bitcoin development last month.

The chatter around op_vault has steadily increased, but it is not clear when the proposal will be merged into Bitcoin Core – if at all. Many proposals are debated and refined for years before they are adopted or abandoned.

O’Beirne recommended the Speedy Trial – the same process used to activate the 2021 Taproot upgrade – as the preferred method to activate op_vault. The Speedy Trial assigns a three-month activation window for the Bitcoin network to reach a threshold of miners signaling support for a proposed upgrade. The upgrade is applied only if the specific threshold is reached. The use of Speedy Trial is not without gradations, some of which believe it gives certain groups in the Bitcoin community too much influence.

“Taproot Speedy was a terrible idea,” tweeted Francis Pouliot, CEO of Bitcoin Exchange, Bitcoin Bull. “The precedent for soft fork collaboration between groups of ‘influential’ developers and miners.”

As for the fate of op_vault in the coming months, Light says “it’s too early to tell.”