SIGHASH_ANYPREVOUT

SIGHASH_ANYPREVOUT, or BIP-118 (previously named SIGHASH_NOINPUT), is a soft-fork that allows a transaction to be signed without reference to any specific previous output, such that later any output with a matching signature can be dynamically added later.

Use Cases

There are two main super-powerful things you can do with BIP-118 that you cannot do otherwise:

• Eltoo, a protocol that fulfills Satoshi's vision for nSequence by allowing peers to exchange presigned transactions offchain with increased sequence numbers such that only the latest one can be published to the chain. Read the whitepaper or this more approachable explanation, or listen to this podcast episode that explains it.
  With Eltoo we can do:
  • Improved Lightning Channels, which allow for:
    • Lightweight and almost free watchtowers.
    • Safer channel management without penalty transactions.
    • Ability to close a channel entirely to one side, without toxic change being left at the other side.
    • Much easier channel backups.
    • Multiparty channels (also known as "channel factories").
    • Less fee estimation problems that cause fee overpayments and unwanted channel closes.
    • Interoperability with currently existing Lightning channels.
    • The Lot49 protocol for Lightning-powered low-latency mesh networks.
    • Layered commitments that further simplify channels.
    • Overall much simpler protocol flow that allows for easier implementation of other ideas on top of Lightning.
  • Blind Statechains, a protocol for off-chain transfer of UTXOs using blind servers and/or federations as semi-trusted third-parties. Read the original proposal or this more approachable explanation, or listen to this podcast episode.
    Statechains can be used:
    • As an offchain value transfer mechanism in itself, used to transfer large values as single, unbroken UTXOs (with change being given with statechains of smaller denominations or through other means).
    • To open Lightning channels on top of these UTXOs. And then these channels can be used or transferred to others without the chain being touched.
    • To do any fancy thing that involves UTXO ownership (RGB or DLCs, for example), but off-chain.
• Covenants, a way to make sure one transaction can only be spent by an specific other can be achieved using this secret little trick that embeds the signature for transaction t+1 right inside the output of transaction t.
  These covenants enable very important things such as:
  • Spacechains, blindly merge-mined blockchains that enhance the Bitcoin ecosystem because despite them not having a 2-way peg mechanism, they also don't have a speculative altcoin in them. Watch the presentation, read the brief BMM explanation or join the Telegram group.
    With Spacechains we can do
    • A chain for all kinds of assets issued by entities or individuals;
    • A DNS chain that solves Zooko's triangle without needing an altcoin;
    • A chain that executes Ethereum-like smart-contracts;
    • A chain with BTC IOU tokens in it, guaranteed by an entity, by hashrate escrows, some magical zero-knowledge proof system or some other complex mechanism yet to be invented;
    • A chain with all of the above;
    All without burdening Bitcoin users and at the same time paying fees to miners who don't even have to be aware these things exist.
  • Safer Bitcoin Vaults.

Steps to Activation

1. Get the updated BIP merged.
2. Have the benefits and tradeoffs of the change explained in clear form and acknowledged by anyone who may be interested (this website is an attempt at this).
3. Get working (?) code for it.
4. Make a testnet for it.
5. (Who knows what has to happen for something to be soft-forked in, but let's hope at this point miners will push for it themselves so it won't take 2 years.)