Delayed transactions are oh-so-close to becoming an invaluable tool in bitcoin security.
I would LOVE for some kind of implementation to be created that enforces the following logic in a trustless network:
- Your bitcoin transaction will be included in a block only when it can detect a previous spend attempt that it is X number of confirmations (time) prior.
- Or your bitcoin transaction may be instantly sent to the prespecified address Y.
What does this mean? If implemented properly it means a
seriously hard to steal hot wallet. You make an address with a special kind of wallet. The ultimate purpose of your wallet is not to store private keys, but to store something like an encrypted private key that can only be unlocked by communicating with an external network that understands the rules behind the address you created.
If later, you make a transaction to spend some bitcoin using this wallet, it does not immediately go into the blockchain (no private key here) it gets forwarded to this network and hangs out for a while until it reaches maturity, and then boom the private key can finally be decrypted when its finally included in a block. The network itself might even be co-signing it as an m of n transaction.
While still immature, a transaction can be made to overwrite the first spend attempt and the waiting process starts over again. Only the last and most recent spend attempt from that address will make it into the blockchain.
This means if a spend attempt is incorrect (theft or mistake) there is time to correct it before its permanently gone forever. To avoid getting into an endless spend war with a thief, you can instantly send it to that failsafe address you set up in the beginning (like an offline wallet)
This means you have a chance to immediately recognize when a malicious party is attempting to steal your coins and do something to RECLAIM THEM.
Thus, stealing bitcoins is no longer an undetectable crime that has no punishment. It could quickly become a pointless crime that doesn't pay. Even more importantly, your computer would be a worthless target. With no private keys to steal, the only hope a thief could have is to steal your precursor key, spend it to the delay enforcing network, and hope you don't notice before it matures there.
How could these kinds of delayed transactions be safely enforced for those who want them? Many solutions may exist but they ultimately require some very creative thinking in order to implement without changing the existing bitcoin protocol. I do like the idea of a specialized wallet that uses a sister blockchain. It listens to the bitcoin blockchain and acts as a sort of transaction generator, using pre-specified rules to co-sign your transactions. If the network is distributed and peer-to-peer, then a malicious entity would find it very difficult to try to override the networks rules about when transactions mature.
