Time-Locked Contract

A time-locked contract is any Bitcoin script that uses time as a condition for spending. Bitcoin offers four building blocks for time:

• nLockTime (transaction-level absolute time): the transaction is invalid before a specific block height or Unix timestamp.
• nSequence (input-level relative time): the input is invalid until N blocks (or N units of time) have passed since the parent output was confirmed.
• OP_CHECKLOCKTIMEVERIFY (CLTV, BIP 65): script-level check that enforces an absolute time before the spend is allowed.
• OP_CHECKSEQUENCEVERIFY (CSV, BIP 112): script-level check that enforces a relative time since the output was created.

Both script-level opcodes use Median Time Past (MTP, BIP 113) as the time reference, which makes the comparison resistant to miner timestamp manipulation.

Real-world uses are everywhere:

• Lightning channels: HTLCs use CSV to enforce a delay window before a counterparty can claim a payment, giving the other side time to broadcast a penalty if they cheat.
• Vaults: a "spend after 7 days" branch in the script lets users recover from a compromised hot key without losing funds.
• Inheritance: a fallback branch becomes spendable by a designated heir after N months without activity from the primary holder.
• DLCs (Discreet Log Contracts): timeouts on oracle attestations let counterparties recover funds if the oracle never signs.
• Atomic swaps and submarine swaps: the timeout branch lets the funder recover if the swap counterparty disappears before claiming.

Time locks are one of Bitcoin's most powerful primitives. Combined with multisig and hash-locked spending paths, they're the substrate for nearly every non-trivial on-chain or off-chain protocol.