<pre>
  BIP: 119
  Layer: Consensus (soft fork)
  Title: CHECKTEMPLATEVERIFY
  Author: Jeremy Rubin <j@rubin.io>
  Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP-0119
  Status: Draft
  Type: Standards Track
  Created: 2020-01-06
  License: BSD-3-Clause
</pre>

==Abstract==

This BIP proposes a new opcode, OP_CHECKTEMPLATEVERIFY, to be activated
as a change to the semantics of OP_NOP4.

The new opcode has applications for transaction congestion control and payment
channel instantiation, among others, which are described in the Motivation
section of this BIP.

==Summary==

OP_CHECKTEMPLATEVERIFY uses opcode OP_NOP4 (0xb3) as a soft fork upgrade.

OP_CHECKTEMPLATEVERIFY does the following:

* There is at least one element on the stack, fail otherwise
* The element on the stack is 32 bytes long, NOP otherwise
* The DefaultCheckTemplateVerifyHash of the transaction at the current input index is equal to the element on the stack, fail otherwise

The DefaultCheckTemplateVerifyHash commits to the serialized version, locktime, scriptSigs hash (if any
non-null scriptSigs), number of inputs, sequences hash, number of outputs, outputs hash, and
currently executing input index.

The recommended standardness rules additionally:

* Reject non-32 byte as SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS.

==Motivation==

Covenants are restrictions on how a coin may be spent beyond key ownership. Covenants can be useful
to construct smart contracts. As covenants are complex to implement and risk of introducing
fungibility discriminants they have not been seriously considered for inclusion in Bitcoin.

This BIP introduces a simple covenant called a *template* which enables a limited set of highly
valuable use cases without significant risk.

A few examples are described below, which should be the subject of future non-consensus
standardization efforts.

===Congestion Controlled Transactions===

When there is a high demand for blockspace it becomes very expensive to make transactions. A large
volume payment processor may aggregate all their payments into a single O(1) transaction commitment
for purposes of confirmation using CHECKTEMPLATEVERIFY. Then, some time later, the payments can
be expanded out of that UTXO when the demand for blockspace is decreased. These payments can be
structured in a tree-like fashion to reduce individual costs of redemption.

The below chart showcases the structure of these transactions in comparison to
normal transactions and batched transactions.

<img src="bip-0119/states.svg" align="middle"></img>

A simulation is shown below of what impact this could have on mempool backlog
given 5% network adoption, and 50% network adoption. The code for the simulation
is provided in this BIP's subdirectory.

<img src="bip-0119/five.png" align="middle"></img>
<img src="bip-0119/fifty.png" align="middle"></img>

===Payment Channels===

There are numerous payment channel related uses.

====Channel Factories====

Using CHECKTEMPLATEVERIFY for Channel Factories is similar to the use for Congestion Control,
except the leaf node transactions are channels instead of plain payments. The channel can be between
the sender and recipient or a target of recipient's choice. Using an CHECKTEMPLATEVERIFY, the
recipient may give the sender an address which makes a tree of channels unbeknownst to them.
These channels are time insensitive for setup, as all punishments are relative timelocked to the
penultimate transaction node.
Thus, coins sent using a congestion controlled transaction can still enjoy instant liquidity.

====Non-Interactive Channels====

When opening a traditional payment channel, both parties to the channel must participate. This is
because the channel uses pre-signed multi-sig transactions to ensure that a channel can always be
exited by either party, before entering.
With CHECKTEMPLATEVERIFY, it’s possible for a single party to construct a channel which either
party can exit from without requiring signatures from both parties.
These payment channels can operate in one direction, paying to the channel "listener" without need
for their private key to be online.
<img src="bip-0119/nic.svg" align="middle"></img>

====Increased Channel Routes====

In the Lightning Network protocol, Hashed Time Locked Contracts (HTLCS) are used in the construction
of channels. A new HTLC is required per route that the channel is serving in.
In BOLT #2, this maximum number of HTLCs in a channel is hard limited to 483 as the maximum safe
size to prevent the transaction from being too large to be valid. In common software implementations
such as LND, this limit is set much lower to 12 HTLCS. This is because accepting a larger number of
HTLCS makes it more difficult for transactions to confirm during congested periods as they must pay
higher fees.
Therefore, similarly to how congestion control is handled for normal transaction, lightning channel
updates can be done across an CHECKTEMPLATEVERIFY tree, allowing nodes to safely use many more
HTLCS.
Because each HTLC can have its own relative time lock in the tree, this also improves the latency
sensitivity of the lightning protocol on contested channel close.

===Wallet Vaults===

This section will detail two variants of wallet vault that can be built using
CTV.  Wallet vaults are a useful tool when greater security is required for
cold storage solutions, providing default transactional paths that move funds
from one's cold storage to a hot wallet.

One type of cold wallet can be set up such that a customer support desk can,
without further authorization, move a portion of the funds (using multiple
pre-set amounts) into a lukewarm wallet operated by an isolated support desk.
The support desk can then issue some funds to a hot wallet, and send the
remainder back to cold storage with a similar withdrawal mechanism in place.
This is all possible without CHECKTEMPLATEVERIFY, but CHECKTEMPLATEVERIFY
eliminates the need for coordination and online signers, as well as reducing
the ability for a support desk to improperly move funds.  Furthermore, all such
designs can be combined with relative time locks to give time for compliance
and risk desks to intervene. This is a 'Coins at Rest' or 'Optically Isolated'
vault, and is shown below.

<img src="bip-0119/vaults.svg" align="middle"></img>

An alternative design for vaults is also highly effective and simpler to
implement in Sapio, a smart contract programming language.  In this design, the
user commits to a single UTXO that contains a program for an annuity of
withdrawals from cold storage to a hot wallet. At any time, the remaining
balance for the annuity can be cancelled and funds locked entirely in cold
storage. The withdrawals to the hot wallet can be 'cancelled' before a maturity
date to ensure the action was authorized. These sort of vaults strongly benefit
from non-interactivity because the withdrawal program can be set up with cold
keys that are permanently offline, except in case of emergency. The image below
shows an instance of this type of wallet vault created with Sapio in Sapio
Studio. These types of wallet vault can also be chained together by taking
advantage of CTV's scriptSig commitment. This type of vault is a 'Coins in Motion'
variant where the coins move along the control path.

<img src="bip-0119/vaultanim.gif" align="middle"></img>

===CoinJoin / Payment Pools / Join Pools ===

CHECKTEMPLATEVERIFY makes it much easier to set up trustless CoinJoins than
previously because participants agree on a single output which pays all
participants, which will be lower fee than before.  Further Each participant
doesn't need to know the totality of the outputs committed to by that output,
they only have to verify their own sub-tree will pay them. These trees can
then, using a top-level Schnorr key, be interactively updated on a rolling basis
forming a "Payment Pool".

==Detailed Specification==

The below code is the main logic for verifying CHECKTEMPLATEVERIFY, and is the canonical
specification for the semantics of OP_CHECKTEMPLATEVERIFY.

    case OP_CHECKTEMPLATEVERIFY:
    {
        // if flags not enabled; treat as a NOP4
        if (!(flags & SCRIPT_VERIFY_DEFAULT_CHECK_TEMPLATE_VERIFY_HASH)) {
            if (flags & SCRIPT_VERIFY_DISCOURAGE_UPGRADABLE_NOPS)
                return set_error(serror, SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS);
            break;
        }

        if (stack.size() < 1)
            return set_error(serror, SCRIPT_ERR_INVALID_STACK_OPERATION);

        // If the argument was not 32 bytes, treat as OP_NOP4:
        switch (stack.back().size()) {
            case 32:
                if (!checker.CheckDefaultCheckTemplateVerifyHash(stack.back())) {
                    return set_error(serror, SCRIPT_ERR_TEMPLATE_MISMATCH);
                }
                break;
            default:
                // future upgrade can add semantics for this opcode with different length args
                // so discourage use when applicable
                if (flags & SCRIPT_VERIFY_DISCOURAGE_UPGRADABLE_NOPS) {
                    return set_error(serror, SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS);
                }
        }
    }
    break;

Where

    bool CheckDefaultCheckTemplateVerifyHash(const std::vector<unsigned char>& hash) {
        return GetDefaultCheckTemplateVerifyHash(current_tx, current_input_index) == uint256(hash);
    }

The hash is computed as follows:

    uint256 GetDefaultCheckTemplateVerifyHash(const CTransaction& tx, uint32_t input_index) {
        return GetDefaultCheckTemplateVerifyHash(tx, GetOutputsSHA256(tx), GetSequenceSHA256(tx), input_index);
    }
    uint256 GetDefaultCheckTemplateVerifyHash(const CTransaction& tx, const uint256& outputs_hash, const uint256& sequences_hash,
                                    const uint32_t input_index) {
        bool skip_scriptSigs = std::find_if(tx.vin.begin(), tx.vin.end(),
                [](const CTxIn& c) { return c.scriptSig != CScript(); }) == tx.vin.end();
        return skip_scriptSigs ? GetDefaultCheckTemplateVerifyHashEmptyScript(tx, outputs_hash, sequences_hash, input_index) :
            GetDefaultCheckTemplateVerifyHashWithScript(tx, outputs_hash, sequences_hash, GetScriptSigsSHA256(tx), input_index);
    }
    uint256 GetDefaultCheckTemplateVerifyHashWithScript(const CTransaction& tx, const uint256& outputs_hash, const uint256& sequences_hash,
                                    const uint256& scriptSig_hash, const uint32_t input_index) {
        auto h =  CHashWriter(SER_GETHASH, 0)
            << tx.nVersion
            << tx.nLockTime
            << scriptSig_hash
            << uint32_t(tx.vin.size())
            << sequences_hash
            << uint32_t(tx.vout.size())
            << outputs_hash
            << input_index;
        return h.GetSHA256();
    }
    uint256 GetDefaultCheckTemplateVerifyHashEmptyScript(const CTransaction& tx, const uint256& outputs_hash, const uint256& sequences_hash,
                                    const uint32_t input_index) {
        auto h =  CHashWriter(SER_GETHASH, 0)
            << tx.nVersion
            << tx.nLockTime
            << uint32_t(tx.vin.size())
            << sequences_hash
            << uint32_t(tx.vout.size())
            << outputs_hash
            << input_index;
        return h.GetSHA256();
    }

A PayToBareDefaultCheckTemplateVerifyHash output matches the following template:

    bool CScript::IsPayToBareDefaultCheckTemplateVerifyHash() const
    {
     // Extra-fast test for pay-to-basic-standard-template CScripts:
     return (this->size() == 34 &&
             (*this)[0] == 0x20 &&
             (*this)[33] == OP_CHECKTEMPLATEVERIFY);
    }

==Deployment==

Deployment should be done via BIP 9 VersionBits deployed through Speedy Trial.

The start time and bit in the implementation are currently set to bit 5 and
NEVER_ACTIVE/NO_TIMEOUT, but this is subject to change while the BIP is a draft.

For the avoidance of unclarity, the parameters to be determined are:

    // Deployment of CTV (BIP 119)
    consensus.vDeployments[Consensus::DEPLOYMENT_CHECKTEMPLATEVERIFY].bit = 5;
    consensus.vDeployments[Consensus::DEPLOYMENT_CHECKTEMPLATEVERIFY].nStartTime = Consensus::BIP9Deployment::NEVER_ACTIVE;
    consensus.vDeployments[Consensus::DEPLOYMENT_CHECKTEMPLATEVERIFY].nTimeout = Consensus::BIP9Deployment::NO_TIMEOUT;
    consensus.vDeployments[Consensus::DEPLOYMENT_CHECKTEMPLATEVERIFY].min_activation_height = 0;

Until BIP-119 reaches ACTIVE state and the 
SCRIPT_VERIFY_DEFAULT_CHECK_TEMPLATE_VERIFY_HASH flag is set, the network should
execute a NOP4 as SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS for policy and a NOP for
consensus.

In order to facilitate using CHECKTEMPLATEVERIFY, the common case of a
PayToBareDefaultCheckTemplateVerifyHash
with no scriptSig data shall be made standard to permit relaying. Future template types may be
standardized later as policy changes.

==Reference Implementation==

A reference implementation and tests are available here:
https://github.com/JeremyRubin/bitcoin/tree/checktemplateverify.

==Rationale==

The goal of CHECKTEMPLATEVERIFY is to be minimal impact on the existing codebase -- in the
future, as we become aware of more complex but shown to be safe use cases new template types can be added.

Below we'll discuss the rules one-by-one:

====The DefaultCheckTemplateVerifyHash of the transaction at the current input index matches the top of the stack====

The set of data committed to is a superset of data which can impact the TXID of the transaction,
other than the inputs. This ensures that for a given known input, the TXIDs can also be known ahead
of time.  Otherwise, CHECKTEMPLATEVERIFY would not be usable for Channel Factory type constructions
as the redemption TXID could be malleated and pre-signed transactions invalidated.

=====Committing to the version and locktime=====

Were these values not committed, it would be possible to delay the spending of
an output arbitrarily as well as possible to change the TXID.

Committing these values, rather than restricting them to specific values, is
more flexible as it permits users of CHECKTEMPLATEVERIFY the set the version and
locktime as they please.

=====Committing to the ScriptSigs Hash=====

The scriptsig in a segwit transaction must be exactly empty, unless it is a P2SH
segwit transaction in which case it must be only the exact redeemscript. P2SH is incompatible
(unless the P2SH hash is broken) with CHECKTEMPLATEVERIFY because the template hash must commit
to the  ScriptSig, which must contain the redeemscript, which is a hash cycle.

To prevent malleability when not using a segwit input, we also commit to the
scriptsig. This makes it possible to use a 2 input CHECKTEMPLATEVERIFY with a legacy pre-signed
spend, as long as the exact scriptsig for the legacy output is committed. This is more robust than
simply disallowing any scriptSig to be set with CHECKTEMPLATEVERIFY.

If no scriptSigs are set in the transaction, there is no purpose in hashing the data or including it
in the DefaultCheckTemplateVerifyHash, so we elide it. It is expected to be common that no scriptSigs will be
set as segwit mandates that the scriptSig must be empty (to avoid malleability).

We commit to the hash rather than the values themselves as this is already
precomputed for each transaction to optimize SIGHASH_ALL signatures.

Committing to the hash additionally makes it simpler to construct DefaultCheckTemplateVerifyHash safely and unambiguously from
script.

=====Committing to the number of inputs=====

If we allow more than one input to be spent in the transaction then it would be
possible for two outputs to request payment to the same set of outputs,
resulting in half the intended payments being discarded, the "half-spend" problem.

Furthermore, the restriction on which inputs can be co-spent is critical for
payments-channel constructs where a stable TXID is a requirement (updates would
need to be signed on all combinations of inputs).

However, there are legitimate use cases for allowing multiple inputs. For
example:

Script paths:

    Path A: <+24 hours> OP_CHECKSEQUENCEVERIFY OP_CHECKTEMPLATEVERIFY <Pay Alice 1 Bitcoin (1 input) nLockTime for +24 hours>
    Path B: OP_CHECKTEMPLATEVERIFY <Pay Bob 2 Bitcoin (2 inputs)>

In this case, there are 24 hours for the output to, with the addition of a
second output, pay Bob 2 BTC. If 24 hours lapses, then Alice may redeem her 1
BTC from the contract. Both input UTXOs may have the exact same Path B, or only one.

The issue with these constructs is that there are N! orders that the inputs can
be ordered in and it's not generally possible to restrict the ordering.

CHECKTEMPLATEVERIFY allows for users to guarantee the exact number of inputs being
spent. In general, using CHECKTEMPLATEVERIFY with more than one input is difficult
and exposes subtle issues, so multiple inputs should not be used except in
specific applications.

In principal, committing to the Sequences Hash (below) implicitly commits to the number of inputs,
making this field strictly redundant. However, separately committing to this number makes it easier
to construct DefaultCheckTemplateVerifyHash from script.

We treat the number of inputs as a `uint32_t` because signature checking code expects nIn to be an
`unsigned int`, even though in principal a transaction can encode more than a `uint32_t`'s worth of
inputs.

=====Committing to the Sequences Hash=====

If we don't commit to the sequences, then the TXID can be malleated. This also allows us to enforce
a relative sequence lock without an OP_CSV. It is insufficient to just pair CHECKTEMPLATEVERIFY
with OP_CSV because OP_CSV enforces a minimum nSequence value, not a literal value.

We commit to the hash rather than the values themselves as this is already
precomputed for each transaction to optimize SIGHASH_ALL signatures.

Committing to the hash additionally makes it simpler to construct DefaultCheckTemplateVerifyHash safely and unambiguously from
script.

=====Committing to the Number of Outputs=====

In principal, committing to the Outputs Hash (below) implicitly commits to the number of outputs,
making this field strictly redundant. However, separately committing to this number makes it easier
to construct DefaultCheckTemplateVerifyHash from script.

We treat the number of outputs as a `uint32_t` because a `COutpoint` index is a `uint32_t`, even
though in principal a transaction could encode more outputs.

=====Committing to the outputs hash=====

This ensures that spending the UTXO is guaranteed to create the exact outputs
requested.

We commit to the hash rather than the values themselves as this is already
precomputed for each transaction to optimize SIGHASH_ALL signatures.

Committing to the hash additionally makes it simpler to construct DefaultCheckTemplateVerifyHash safely and unambiguously from
script.

=====Committing to the current input's index=====

Committing to the currently executing input's index is not strictly needed for anti-malleability,
however it does restrict the input orderings eliminating a source of malleability for protocol
designers.

However, committing to the index eliminates key-reuse vulnerability to the half-spend problem.
As CHECKTEMPLATEVERIFY scripts commit to being spent at particular index, reused instances of these
scripts cannot be spent at the same index, which implies that they cannot be spent in the same transaction.
This makes it safer to design wallet vault contracts without half-spend vulnerabilities.

Committing to the current index doesn't prevent one from expressing a CHECKTEMPLATEVERIFY which can
be spent at multiple indicies. In current script, the CHECKTEMPLATEVERIFY operation can be wrapped
in an OP_IF for each index (or Tapscript branches in the future). If OP_CAT or OP_SHA256STREAM are
added to Bitcoin, the index may simply be passed in by the witness before hashing.

=====Committing to Values by Hash=====

Committing to values by hash makes it easier and more efficient to construct a
DefaultCheckTemplateVerifyHash
from script. Fields which are not intended to be set may be committed to by hash without incurring
O(n) overhead to re-hash.

Furthermore, if OP_SHA256STREAM is added in the future, it may be possible to write a script which
allows adding a single output to a list of outputs without incurring O(n) overhead by committing to
a hash midstate in the script.

=====Using SHA256=====

SHA256 is a 32 byte hash which meets Bitcoin's security standards and is
available already inside of Bitcoin Script for programmatic creation of template
programs.

RIPEMD160, a 20 byte hash, might also be a viable hash in some contexts and has some benefits. For fee efficiency,
RIPEMD160 saves 12 bytes. However, RIPEMD160 was not chosen for BIP-119 because it introduces
risks around the verification of programs created by third parties to be subject to a 
[birthday-attack https://bitcoin.stackexchange.com/questions/54841/birthday-attack-on-p2sh] on
transaction preimages.

=====Using Non-Tagged Hashes=====

The Taproot/Schnorr BIPs use Tagged Hashes
(`SHA256(SHA256(tag)||SHA256(tag)||msg)`) to prevent taproot leafs, branches,
tweaks, and signatures from overlapping in a way that might introduce a security
[vulnerability https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2018-June/016091.html].

OP_CHECKTEMPLATEVERIFY is not subject to this sort of vulnerability as the
hashes are effectively tagged externally, that is, by OP_CHECKTEMPLATEVERIFY
itself and therefore cannot be confused for another hash.

It would be a conservative design decisison to make it a tagged hash even if
there was no obvious benefit and no cost. However, in the future, if OP_CAT were
to be introduced to Bitcoin, it would make programs which dynamically build
OP_CHECKTEMPLATEVERIFY hashes less space-efficient. Therefore, bare untagged hashes
are used in BIP-119.

=====The Ordering of Fields=====

Strictly speaking, the ordering of fields is insignificant. However, with a
carefully selected order, the efficiency of future scripts (e.g., those using a
OP_CAT or OP_SHA256STREAM) may be improved (as described in the Future Upgrades
section).

In particular, the order is selected in order of least likely to change to most.

#nVersion
#nLockTime
#scriptSig hash (maybe!)
#input count
#sequences hash
#output count
#outputs hash
#input index

Several fields are infrequently modified. nVersion should change infrequently. nLockTime should
generally be fixed to 0 (in the case of a payment tree, only the *first* lock time is needed to
prevent fee-sniping the root). scriptSig hash should generally not be set at all.

Since there are many possible sequences hash for a given input count, the input count comes before
the sequences hash.

Since there are many possible outputs hashes for a given out count, the output count comes before
the outputs hash.

Since we're generally using a single input to many output design, we're more likely to modify the
outputs hash than the inputs hash.

We usually have just a single input on a CHECKTEMPLATEVERIFY script, which would suggest that it
does not make sense for input index to be the last field. However, given the desirability of being
able to express a "don't care" index easily (e.g., for decentralized kickstarter-type transactions),
this value is placed last.

===Design Tradeoffs and Risks===
Covenants have historically been controversial given their potential for fungibility risks -- coins
could be minted which have a permanent restriction on how they may or may not be spent or required
to propagate metadata.

In the CHECKTEMPLATEVERIFY approach, the covenants are severely restricted to simple templates. The
structure of CHECKTEMPLATEVERIFY template is such that the outputs must be known exactly at the
time of construction. Based on a destructuring argument, it is only possible to create templates
which expand in a finite number of steps. Thus templated transactions are in theory as safe as
transactions which create all the inputs directly in this regard.

Furthermore, templates are restricted to be spendable as a known number of inputs only, preventing
unintentional introduction of the 'half spend' problem.

Templates, as restricted as they are, bear some risks.

====Permanently Unspendable Outputs====

The preimage argument passed to CHECKTEMPLATEVERIFY may be unknown or otherwise unsatisfiable.
However, requiring knowledge that an address is spendable from is incompatible with sender's ability
to spend to any address (especially, OP_RETURN). If a sender needs to know the template can be spent
from before sending, they may request a signature of an provably non-transaction challenge string
from the leafs of the CHECKTEMPLATEVERIFY tree.

====Forwarding Addresses====

Key-reuse with CHECKTEMPLATEVERIFY may be used as a form of "forwarding address contract".
A forwarding address is an address which can automatically execute in a predefined way.
For example, a exchange's hot wallet might use an address which can automatically be moved to a cold
storage address after a relative timeout.

The issue is that reusing addresses in this way can lead to loss of funds.
Suppose one creates an template address which forwards 1 BTC to cold storage.
Creating an output to this address with less than 1 BTC will be frozen permanently.
Paying more than 1 BTC will lead to the funds in excess of 1BTC to be paid as a large miner fee.
CHECKTEMPLATEVERIFY could commit to the exact amount of bitcoin provided by the inputs/amount of fee
paid, but as this is a user error and not a malleability issue this is not done.
Future soft-forks could introduce opcodes which allow conditionalizing which template or script
branches may be used based on inspecting the amount of funds available in a transaction

As a general best practice, it is incumbent on Bitcoin users to not reuse any address unless you are
certain that the address is acceptable for the payment attempted. This limitation and risk is not
unique to CHECKTEMPLATEVERIFY. For example, atomic swap scripts are single use once the hash is
revealed. Future Taproot scripts may contain many logical branches that would be unsafe for being
spent to multiple times (e.g., a Hash Time Lock branch should be instantiated with unique hashes
each time it is used). Keys which have signed a SIGHASH_ANYPREVOUT transaction can similarly become
reuse-unsafe.

Because CHECKTEMPLATEVERIFY commits to the input index currently being spent, reused-keys are
guaranteed to execute in separate transactions which reduces the risk of "half-spend" type issues.

====NOP-Default and Standardness Rules====

If the argument length is not exactly 32, CHECKTEMPLATEVERIFY treats it as a NOP.
Many OP_NOP upgrades prefer to fail in such circumstances. In particular, for
CHECKTEMPLATEVERIFY, making an invalid argument a NOP permits future soft-forks to upgrade the
semantics or loosed restrictions around the value being previously pushed only.

The standardness rules may lead an unscrupulous script developer to accidentally rely on the
stricter standardness rules to be enforced during consensus. Should that developer submit a
transaction directly to the network relying on standardness rejection, an standardness-invalid but
consensus-valid transaction may be caused, leading to a potential loss of funds.

====Feature Redundancy====

CHECKTEMPLATEVERIFY templates are substantially less risky than other covenant systems. If
implemented, other covenant systems could make the CHECKTEMPLATEVERIFY's functionality redundant.
However, given CHECKTEMPLATEVERIFY's simple semantics and low on chain cost it's likely that it
would continue to be favored even if redundant with other capabilities.

More powerful covenants like those proposed by MES16, would also bring some benefits in terms of
improving the ability to adjust for things like fees rather than relying on child-pays-for-parent or
other mechanisms. However, these features come at substantially increased complexity and room for
unintended behavior.

Alternatively, SIGHASH_ANYPREVOUTANYSCRIPT based covenant designs can implement
something similar to templates, via a scriptPubKey like:

    <sig of desired TX with PK and fixed nonce R || SIGHASH_ANYPREVOUTANYSCRIPT <PK with public SK> OP_CHECKSIG

SIGHASH_ANYPREVOUTANYSCRIPT bears additional technical and implementation risks
that may preclude its viability for inclusion in Bitcoin, but the capabilities
above are similar to what CHECKTEMPLATEVERIFY offers. The key functional
difference between SIGHASH_ANYPREVOUTANYSCRIPT and OP_CHECKTEMPLATEVERIFY is
that OP_CHECKTEMPLATEVERIFY restricts the number of additional inputs and
precludes dynamically determined change outputs while
SIGHASH_ANYPREVOUTANYSCRIPT can be combined with SIGHASH_SINGLE or
SIGHASH_ANYONECANPAY. For the additional inputs, OP_CHECKTEMPLATEVERIFY also
commits to the scriptsig and sequence, which allows for specifying specific P2SH
scripts (or segwit v0 P2SH) which have some use cases. Furthermore,
CHECKTEMPLATEVERIFY has benefits in terms of script size (depending on choice of
PK, SIGHASH_ANYPREVOUTANYSCRIPT may use about 2x-3x the bytes) and verification
speed, as OP_CHECKTEMPLATEVERIFY requires only hash computation rather than
signature operations. This can be significant when constructing large payment
trees or programmatic compilations.  CHECKTEMPLATEVERIFY also has a feature-wise
benefit in that it provides a robust pathway for future template upgrades.

OP_CHECKSIGFROMSTACKVERIFY along with OP_CAT may also be used to emulate
CHECKTEMPLATEVERIFY.  However such constructions are more complicated to use
than CHECKTEMPLATEVERIFY, and encumbers additional verification overhead absent
from CHECKTEMPLATEVERIFY. These types of covenants also bear similar potential
recursion issues to OP_COV which make it unlikely for inclusion in Bitcoin.

Given the simplicity of this approach to implement and analyze, and the benefits realizable by user
applications, CHECKTEMPLATEVERIFY's template based approach is proposed in lieu of more complete
covenants system.

====Future Upgrades====

This section describes updates to OP_CHECKTEMPLATEVERIFY that are possible in
the future as well as synergies with other possible upgrades.

=====CHECKTEMPLATEVERIFY Versions=====

OP_CHECKTEMPLATEVERIFY currently only verifies properties of 32 byte arguments.
In the future, meaning could be ascribed to other length arguments.  For
example, a 33-byte argument could just the last byte as a control program. In
that case, DefaultCheckTemplateVerifyHash could be computed when the flag byte
is set to CTVHASH_ALL. Other programs could be added similar to SIGHASH_TYPEs.
For example, CTVHASH_GROUP could read data from the Taproot Annex for
compatibility with SIGHASH_GROUP type proposals and allow dynamic malleability
of which indexes get hashed for bundling.

=====Eltoo with OP_CHECKSIGFROMSTACKVERIFY=====

Were both OP_CHECKTEMPLATEVERIFY and OP_CHECKSIGFROMSTACKVERIFY to be added to
Bitcoin, it would be possible to implement a variant of Eltoo's floating
transactions using the following script:

    witness(S+n): <sig> <H(tx with nLockTime S+n paying to program(S+n))>
    program(S): OP_CHECKTEMPLATEVERIFY <musig_key(pk_update_a, pk_update_b)> OP_CHECKSIGFROMSTACKVERIFY <S+1> OP_CHECKLOCKTIMEVERIFY

Compared to SIGHASH_ANYPREVOUTANYSCRIPT, because OP_CHECKTEMPLATEVERIFY does not
allow something similar to SIGHASH_ANYONECANPAY or SIGHASH_SINGLE, protocol
implementers might elect to sign multiple versions of transactions with CPFP
Anchor Outputs or Inputs for paying fees or an alternative such as transaction
sponsors might be considered.

=====OP_AMOUNTVERIFY=====

An opcode which verifies the exact amount that is being spent in the
transaction, the amount paid as fees, or made available in a given output could
be used to make safer OP_CHECKTEMPLATEVERIFY addressses. For instance, if the
OP_CHECKTEMPLATEVERIFY program P expects exactly S satoshis, sending S-1
satoshis would result in a frozen UTXO and sending S+n satoshis would result in
n satoshis being paid to fee. A range check could restrict the program to only
apply for expected values and default to a keypath otherwise, e.g.:

    IF OP_AMOUNTVERIFY <N> OP_GREATER <PK> CHECKSIG ELSE <H> OP_CHECKTEMPLATEVERIFY

=====OP_CAT/OP_SHA256STREAM=====

OP_CHECKTEMPLATEVERIFY is (as described in the Ordering of Fields section)
efficient for building covenants dynamically should Bitcoin get enhanced string
manipulation opcodes.

As an example, the following code checks an input index argument and
concatenates it to the template and checks the template matches the transaction.

    OP_SIZE 4 OP_EQUALVERIF
    <nVersion || nLockTime || input count || sequences hash || output count || outputs hash>
    OP_SWAP OP_CAT OP_SHA256 OP_CHECKTEMPLATEVERIFY

== Backwards Compatibility ==

OP_CHECKTEMPLATEVERIFY replaces a OP_NOP4 with stricter verification semantics. Therefore, scripts
which previously were valid will cease to be valid with this change. Stricter verification semantics
for an OP_NOP are a soft fork, so existing software will be fully functional without upgrade except
for mining and block validation. Similar soft forks for OP_CHECKSEQUENCEVERIFY and OP_CHECKLOCKTIMEVERIFY
(see BIP-0065 and BIP-0112) have similarly changed OP_NOP semantics without introducing compatibility issues.

In contrast to previous forks, OP_CHECKTEMPLATEVERIFY will not make scripts
valid for policy until the new rule is active.

Older wallet software will be able to accept spends from OP_CHECKTEMPLATEVERIFY outputs, but will
require an upgrade in order to treat PayToBareDefaultCheckTemplateVerifyHash chains with a confirmed ancestor as
being "trusted" (i.e., eligible for spending before the transaction is confirmed).

Backports of OP_CHECKTEMPLATEVERIFY can be trivially prepared (see the reference implementation)
for older node versions that can be patched but not upgraded to a newer major release.

== References ==

*[https://utxos.org utxos.org informational site]
*[https://learn.sapio-lang.org Sapio Bitcoin smart contract language]
*[https://rubin.io/advent21 27 Blog Posts on building smart contracts with Sapio and CTV, including examples described here.]
*[https://www.youtube.com/watch?v=YxsjdIl0034&t=2451 Scaling Bitcoin Presentation]
*[https://bitcoinops.org/en/newsletters/2019/05/29/ Optech Newsletter Covering OP_CHECKOUTPUTSHASHVERIFY]
*[https://cyber.stanford.edu/sites/g/files/sbiybj9936/f/jeremyrubin.pdf Structuring Multi Transaction Contracts in Bitcoin]
*[https://github.com/jeremyrubin/lazuli Lazuli Notes (ECDSA based N-of-N Signatures for Certified Post-Dated UTXOs)]
*[https://fc16.ifca.ai/bitcoin/papers/MES16.pdf Bitcoin Covenants]
*[https://bitcointalk.org/index.php?topic=278122.0 CoinCovenants using SCIP signatures, an amusingly bad idea.]
*[https://fc17.ifca.ai/bitcoin/papers/bitcoin17-final28.pdf Enhancing Bitcoin Transactions with Covenants]


===Note on Similar Alternatives===

An earlier version of CHECKTEMPLATEVERIFY, CHECKOUTPUTSHASHVERIFY, is withdrawn
in favor of CHECKTEMPLATEVERIFY. CHECKOUTPUTSHASHVERIFY did not commit to the
version or lock time and was thus insecure.

CHECKTEMPLATEVERIFY could also be implemented as an extension to Taproot, and was
proposed this way earlier. However, given that CHECKTEMPLATEVERIFY has no dependency
on Taproot, it is preferable to deploy it independently.

CHECKTEMPLATEVERIFY has also been previously referred to as OP_SECURETHEBAG, which is mentioned here
to aid in searching and referencing discussion on this BIP.

==Copyright==

This document is licensed under the 3-clause BSD license.
