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What are Time-Locks?

Time-locks control when your Bitcoin is spendable for better security, inheritance planning and backup plans.

Time-locks are a powerful feature within Bitcoin’s scripting language that restrict when a transaction can be executed, adding an extra layer of control and security. With time-locks, you can specify that certain Bitcoin funds can only be accessed after a specific amount of time has passed, making them ideal for delayed access, inheritance planning, and secure backup strategies.

Technical Details of Time-Locks

Time-locks work by embedding specific conditions into Bitcoin transactions, ensuring that the funds cannot be spent until the specified time has elapsed. There are two main types of time-locks:

  1. CheckLockTimeVerify (CLTV): This time-lock enforces an absolute point in time or block height before which the transaction is invalid.
  2. CheckSequenceVerify (CSV): This type uses a relative time measured in the number of blocks since the UTXO was created, ensuring funds can only be spent after a certain number of confirmations.

Time-Locks in Bitcoin: Blocks vs. Real-Time

Unlike conventional time measured by clocks or calendars, Bitcoin measures time by blocks. A new block is generated approximately every 10 minutes, so when you set a time-lock, it is defined by the number of blocks rather than a specific date or time. This means that the exact time may vary slightly, as the average 10-minute interval is not always consistent. For example, a 1-year time-lock would translate to approximately 52,560 blocks (6 blocks per hour, 24 hours per day, for 365 days).

Examples and Scenarios of Time-Locks

Time-locks can be applied in various scenarios to control when funds can be accessed:

  • Delayed Inheritance: Setting up a time-lock to allow a spouse or beneficiary to access funds only after a certain period, such as 1 year of inactivity.
  • Security Buffer: Adding a delay period before your own transactions can be spent, allowing you to cancel or intercept suspicious activity.
  • Backup and Recovery Paths: Setting up fallback recovery options that activate if no activity is detected for a longer period, such as 15 months, enabling trusted parties to regain control.

The Role of Time-Locks in Smart Vault and Smart Backup

In 21st Capital’s Smart Vault, time-locks are used to create layered recovery paths and inheritance planning setups. For example, you can establish a time-lock that grants your spouse access to your funds if no activity occurs for 1 year. If no one claims the funds within that period, a secondary time-lock condition might activate, allowing 21st Capital’s Smart Backup service to step in after 15 months, ensuring that your funds are not permanently lost even if all other access points are compromised.

Example Setup Using Time-Locks:

Let’s say you configure your Smart Vault with a 2-of-3 multi-signature setup, where you hold 2 keys, and your spouse holds the third. You define the following time-lock conditions:

  • Spouse Access After 1 Year: If there is no activity in the wallet for 52,560 blocks (~1 year), the time-lock will allow your spouse to access the funds using the predefined spending conditions.
  • 21st Capital Smart Backup After 15 Months: If no one has moved the funds for 65535 blocks (~15 months), a secondary time-lock will trigger, activating 21st Capital’s recovery key, allowing the Smart Backup service to help recover your funds if all keys are lost.

Why Time-Locks Matter

Time-locks provide a structured and reliable way to control when and how your Bitcoin can be accessed, making them invaluable for secure inheritance planning and emergency recovery paths. They ensure that your funds are only spendable under your specific conditions, providing peace of mind that even in your absence, your Bitcoin will be handled exactly as intended.