jfeldis on Nostr: Covenants have the potential to be extremely dangerous to Bitcoin censorship ...

Covenants have the potential to be extremely dangerous to Bitcoin censorship resistance and fungibility. It allows the enforcement of blacklists, whitelists and the ability to freeze funds and enforce KYC rules.

For instance, a regulated exchange could be required to reject a TX that doesn't have a required covenant attached. And it might attach a covenant the to all withdrawals. Wallets could be legally required to check for certain covenants

The risks outweigh the potential benefits