Oddbean new post about login | logout Sorry, the TL;DR wasn’t based on your message but my own. I was summarizing my reply. I should have labeled it “Summary” instead. I remain confident that decentralizing Bitcoin by making more efficient use of block space will make it more valuable than it would be otherwise. If we do nothing, roughly 10-20 million people can hold keys on chain. Everyone else will have to use some kind of trust-based layer on top. 10-20 million is still way better than the status quo (banking), but increasing the number of people with keys is even better, IMO.
Bitcoin will scale with custodians regardless of your new opcodes. Hal explained this to you in 2010. It's not "better" if you add new opcodes that ultimately break the network because of unintended consequences. Bitcoin is feature complete. Working as intended. Does not need any new opcodes.
Yes, I want more people to have their own keys, but how will this work in practice when fees on the main L1 are high? People say that covenants are the solution but I haven’t found anyone who can explain how covenants solve this problem when fees are high and growing. We can’t just make changes to the core protocol if it doesn’t solve the problem, even if it helps in the short term. Bitcoin is for 1000 years. The risk of software changes is too high to just delay the problem for a few years.
Covenants are not a “solution” to high on-chain fees. I would not make that claim. If others are making that claim, I don’t know their rationale. Covenants are a means of increasing the number of people who can hold keys on chain. If anything, this is likely to make fees higher on a per-UTXO basis. But hopefully lower on a per-person basis, as fewer transactions actually settle to chain. For example, in Lightning, to update channel balances, peers share transactions that are valid but private. They aren’t broadcasted. You don’t open a LN channel just to do one transaction. Rather, you open a channel, do many transactions, then close. By allowing people to share UTXOs in covenants, similar update schemes are possible. You wouldn’t just join a shared UTXO to immediately exit. That would be worse than just using a regular on-chain UTXO, just like it would be worse in Lightning to open a channel, do one TX and close. So yes, in your example, the exit may be costly, especially in a high fee environment. But hopefully exit will not need to be frequent. If exits are frequent, then there’s little to no value in sharing (it may even be worse depending on the scenario).