A Timelock is a type of smart contract primitive that restricts the spending of some bitcoins until a specified future time, or block height.
It is, in my opinion, a very underrated feature of Bitcoin. Any Bitcoin user can use a command like OP_CHECKLOCKTIMEVERIFY (OP_HODL) to create a time locked address where the funds are unspendable until a set date and time has passed. To be specific, we could also be talking about specific block height here. Or a block timestamp. Both are doable in both absolute lock time (cltv) and relative locktime (csv). When this point in time, or this specific block height, has been reached, your time locked bitcoins will become spendable again.
Even though you might not be able to set your clocks after Bitcoin’s block issuance, they usually coincide very well with a specific date and time since the difficulty adjustment algorithm works so well in Bitcoin. Timelock adds a new dimension of security to your funds, since it secures your bitcoins through time, which can be added as a security layer on top of all the features that secure your bitcoins through space, such as MultiSig.
Another fascinating aspect of Bitcoin is the Block Reward Halving, of which the third one was a mere ten days ahead at the time these words were written. When that event happens, the Bitcoin block subsidy (which is the block reward minus all transaction fees) will be cut in half for the third time. After this event, only 6.25 new bitcoins will be minted roughly every ten minutes. In its first four years of existence, Bitcoin’s block subsidy was fifty new coins every ten minutes and this subsidy will now be cut in half for the third time around, a feature of the network that has been around since the code was first released.
If we assume that the price of a bitcoin will continue to rise, and we assume that historical data can at least give us a clue to what a potential future price might be, we could invent a new way to use Timelock.
For argument’s sake, let's assume that the price of a bitcoin will at least double every four years. This is not as far fetched as it might sound, since historical data tells us that the price of bitcoin already has doubled every four years, or in even shorter time frames. Now assume that you want your bitcoins to “trickle down” the generations, and you want to make sure that every new generation of heirs to your wealth gets a fair share of the total amount. You would have to somehow make sure that every subsequent generation gets access to some, but not all, of your bitcoins. This is where we marry the concepts of Timelocks and Halvings.
If a piece of software could divide your bitcoins into smaller and smaller parts by halving the accessible amount every four years, this could provide you with life insurance for generations to come. Let's assume that you have 10 bitcoins. This imaginary software would timelock 5 of those 10 bitcoins for four years, 2.5 of them for eight years, 1.25 of them for twelve years and so on. This way you could ensure that you, or your descendants, never run out of new bitcoins. Even if our price assumption is wrong, it’s still a pretty neat tool for protecting yourself from your own whims and caprices. On top of this, nothing is stopping you from giving away your already spendable bitcoins to your children and grandchildren.
There are a whole lot of aspects and features of Bitcoin that are still vastly unexplored. Bitcoin challenges the very definition of ownership and people are finding new ways to use this linguistic value-expression tool every day. We’re at the dawn of a renaissance of an unprecedented magnitude as the impact of absolute scarcity and unconfiscatability in a commodity is unfolding block by block, day by day every year that passes. Pandora’s box is forever open and it is fascinating to stare down the rabbit hole it reveals because it truly is bottomless. All that hinders us is our imagination. Bitcoin challenges the very limits of human ingenuity and it is a mathematical discovery on par with that of the number zero, e or pi. Euler’s equation for value, if you will. Let your mind wander and think about these things, you never know, YOU might stumble upon an original idea one day. If there’s one scientific field in which you actually have a chance of discovering something original, it is in that of Bitcoin research.
Bitcoin. The final frontier. These are the voyages of a whole new class of entrepreneur. Its continuing mission: to explore strange new aspects of the Bitcoin network. To seek out new life and new civilizations. To boldly go where no one has gone before!
Oh yes, could someone please write the code described above and implement it as a feature in a wallet?
Written by Knut Svanholm
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