The Bitcoin ecosystem has some interesting technical aspects of which most people are unaware. One such feature is CheckLockTimeVerify, a Bitcoin protocol feature allowing users to freeze a particular transaction until a certain point in the future. While this is not the same as a smart contract, the technology itself shows Bitcoin is far more versatile than most people realize.
CheckLockTimeVerify Is a Critical Feature of Bitcoin
Most people who become involved with Bitcoin and cryptocurrency do not look beyond the options of buying, selling, and trading Bitcoin. This is normal, as it is a spendable currency first and foremost. Beyond that, however, the Bitcoin protocol has many interesting features which people can use. CheckLockTimeVerify is one of them, and it allows people to freeze a Bitcoin transaction for a specified amount of time.
This particular feature can prove to be a valuable ally when it comes to setting up recurring subscription models using Bitcoin. Right now, recurring payments are practically impossible without sending funds manually every period. This is one reason why so few subscription-based services accept Bitcoin unless users sign up for an extended period of time right away. Credit cards and bank accounts lend themselves perfectly for recurring payments, whereas cryptocurrencies do not.
CheckLockTimeVerify can be compared to how a traditional recurring payment works. Users send a Bitcoin transaction which will only be unfrozen once a specific point in time is reached. For example, if you pay for a subscription today and want it to renew in 30 days, you’d send a transaction using CheckLockTimeVerify to have it unfrozen 30 days from today. Using this method ensures that the customer has the funds necessary to make the transfer, and that the recipient can see that their transaction is locked in.
The reason why CheckLockTimeVerify matters so much is that it could change the public perception of cryptocurrency in general. A lot of people feel that Bitcoin and altcoins are still a fleeting trend. That situation may change once there is an official Bitcoin-based tradeable fund on exchanges, such as a Bitcoin ETF. It is doubtful the SEC would approve such a fund anytime soon, but you never know. CheckLockTimeVerify could also be a powerful technology for such a fund, as all funds could effectively be “frozen” with relative ease.
Indeed, even cryptocurrency exchanges could benefit from this technology. We have seen various platforms providing interest-bearing accounts to Bitcoin users in the past. It is possible these companies use CheckLockTimeVerify already, but if they do not, now would be a good time to look into this offering. It ensures that customers’ funds are kept safe from harm and cannot be moved until a specified date in the future.
CheckLockTimeVerify is not a one-stop solution against hacks, theft, and other harmful activities. Though it is a feature deserving of a lot more attention, private keys of frozen accounts may still be compromised. Nonetheless, it is a great tool to introduce recurring transactions or to introduce spending limits on Bitcoin wallets for friends and family. There are quite a few ways to use this feature in a positive manner moving forward. It will be interesting to see how developers use CheckLockTimeVerify.