Use Timelock In Bitcoin it is a modality that is used to make transactions. The use of it, could bring risks according to the analysis of a developer whose pseudonym is 0xb10c.
According to this person, the increased use of this blockade could allow robberies among miners. This is because the transactions made with Timelock do not have full network security, according to the report.
It is a network error, which at the moment is almost imperceptible, but will still be there. As the use of the network becomes more widespread, it will become more common for those who use Timelock to be victims of thefts in fee-sniping mode.
What is it and what does it mean to use Timelock in Bitcoin?
A Timelock is a kind of primitive smart contract. With its use, it can be determined at what height or time of a block, a transaction can be collected and sent to the ledger by miners.
It is one of the most practical options of this cryptocurrency, which allows to restrict expenses. Until the parameters with which it has been programmed are met, no miner will be able to take it and include it in a block, leaving it pending.
There are two programmable ways for it. The first is according to the height of the block. The other is by setting a time parameter. Upon reaching the limit, the miners will be able to do their job and the transaction is marked as completed.
It should be noted that the Bitcoin Timelocks were included by Satoshi Nakamoto in the creation of his project. In addition, there are four modalities of the same with double functionality: transactions themselves (nLocktime and nSequence) and scripts (CheckLockTimeVerify and CheckSequenceVerify).
In practice: You want to send 1 Bitcoin to another person and that this transaction reaches you in a non-automatic time. In this case, the Timelock is applied so that you define according to your interest, what will take to arrive. It can be programmed in time frames (for example, in one day) or in sequence (for example, within 20 blocks).
What is the risk of Timelock detected by 0xb10c?
As noted above, this is a network error that allows some vulnerability. In a study, on the basis of transactions operated between September 2019 and March 2020, the aforementioned developer shows his results.
“About 10.9 million (19%) of the 57.49 global transactions were made with Timelock. Of those, 1.6 million were vulnerable. This represents 2% of the total and 10% of those made with Timelock ”.
He concluded in his study that 10% of Bitcoin transactions with Timelock are vulnerable to fee-snipings. When it comes to transactions in general, just 2%. In both cases, the vulnerability is almost invisible today.
The number of users making Bitcoin transactions currently does not represent a massive amount. For this reason, a 10% or 2% error affects a very small number of people when compared to the errors of traditional banking.
However, the development of Bitcoin, its massive adoption and the increase in its price, could make this change and that using Timelock in Bitcoin is a threat to transactions.
A long-term problem
Currently, the profits of the miners rest mainly on the reward of the network per mined block. But, as the Halving successes and the amount of Bitcoin decreases this way, the commissions will begin to take center stage.
Payment for the use of the “priority” modality, to speed up transactions, will be one of the most sought-after forms of reward for those who process them. Thus, fee-sniping will focus on those that take the longest to collect. It would already be in the presence of a failure that would affect the network on a large scale.
Meanwhile, it is a minor problem. 0xb10c aims to have your research taken into account by Bitcon exchange companies. Setting parameters and reinforcing self-security would help reduce risk. Using Timelock in Bitcoin may be safer, even in the long term.