Stolen Bitcoin? An Anti-Theft Feature is Getting a Second Life on Sidechains

At its core, bitcoin is about giving users better control of their money.
Often called “programmable money”, bitcoin has many scripts that limit how future bitcoin transactions can be spent (and that control variables like who can spend them). One such script ensures the correct person is spending the bitcoin by checking if the correct signature was used before unlocking and sending the funds.
This week, Blockstream core tech developer Russell O’Connor revealed he’s been testing a couple of new scripts on an Elements Alpha sidechain (which is pegged to the bitcoin testnet) that could add new functionality.
Called “covenants”, the new style of scripts potentially opens up possibilities for how bitcoin users can control, or restrict, spending of their money – possibly for their protection. (This is an idea that was previously explored by researchers Malte Mser, Ittay Eyal, and Emin Gun Sirer).
One use case for these scripts is to help users rein in their coins in the case of a hack (an all too common occurrence in bitcoin).
When asked what he thinks of the new covenant work, Eyal said it was potentially a boon to bitcoin users who may be worried about losing their bitcoins or otherwise having them compromised or stolen.
Eyal told CoinDesk:

This post was published at Coin Desk on November 4, 2016.