The sleeping giant turns again: Why is BIP-119 considered the most important upgrade after Taproot?

This article discusses the potential and controversy of the Bitcoin Improvement Proposal BIP-119 and its core feature "Covenants."

Written by: Oliver, Mars Finance

In the world of cryptocurrencies, Ethereum and its ecosystem always resemble a teenager eager to "stir things up", constantly attracting the market's attention with novel DeFi Legos and NFT artworks. In contrast, Bitcoin is more like a taciturn elder, deep as the sea. It seldom changes, but every small movement is enough to trigger a profound earthquake across the industry. Since the significant upgrade named "Taproot" in 2021, this elder has enjoyed years of tranquility. However, beneath the calm surface, an undercurrent regarding its future is surging, stirred by a technical proposal numbered BIP-119.

The core of this proposal is an ancient and powerful magic known as "Covenants." It is expected to reach a consensus by the end of the year, but the debates surrounding it have long transcended the code itself, evolving into a philosophical debate about the soul and future of Bitcoin. This is not just a technical route dispute, but more like a collective interrogation of Bitcoin's identity: Should it become an unchanging digital gold, or a financial operating system that can evolve and keep pace with the times?

A "Smart Will" from the Future

To understand the magic of BIP-119, let's first imagine a scenario. Suppose you are a deep-thinking Bitcoin whale who wishes to pass on your assets to future generations, but you are worried that they may be young and reckless, spending extravagantly. In today's Bitcoin world, you are powerless. Once the private key is handed over, the control of the assets is completely transferred. But if BIP-119 is activated, you can establish a "smart will" for your Bitcoin UTXO (which can be understood as your "digital check") that comes from the future.

The core of this "will" is OP_CHECKTEMPLATEVERIFY (abbreviated as CTV). It allows you to specify that this money can only be spent in a certain specific way in the future. For example, you can set a template that states, "These 1000 Bitcoins can only be transferred out 10 each year to my son's designated address for living and studying, starting from 2040." Any attempt to make a transaction that does not comply with this "template" will be ruthlessly rejected by the entire Bitcoin network. It's like putting a time lock and rule lock on your assets, forged by global consensus; the private key is no longer the only scepter.

The most intuitive application of this feature is the personal vault known as "Smart Vaults". Currently, if your private key is stolen, it is tantamount to a disaster. But in the world of CTV, even if a hacker obtains your private key, they cannot take all your assets at once. They can only transfer funds according to your pre-set, extremely slow withdrawal plan (for example, 0.1 BTC per week), like a disciplined "good child". This undoubtedly gives you valuable time to discover the theft and take remedial measures. As Jameson Lopp, co-founder of security company Casa and an industry veteran, stated, this mechanism will "greatly enhance the ability to build better and safer custody methods", which is undoubtedly a great boon for attracting institutions and long-term holders who view asset security as vital.

Paving the "Entrance Ramp" for "Lightning Speed"

However, if the smart vault is just an appetizer for CTV's initial foray, then its empowerment of the Bitcoin Layer 2 ecosystem, represented by the Lightning Network, is the main course that could truly change the game. The Lightning Network greatly enhances the payment efficiency of Bitcoin, but it has always faced an "entry" bottleneck: everyone who wants to get on board must first make a transaction on the congested highway (Bitcoin main chain) to buy themselves a "ticket" (create a channel). When thousands of people want to get on at the same time, this highway will naturally become congested.

CTV cleverly addresses this issue through a mechanism called "Channel Factories." It allows multiple users to "carpool" on the road. Everyone can contribute money to create a shared UTXO through a single on-chain transaction, and then open countless lightning channels among each other off-chain based on this shared foundation. According to its designer Jeremy Rubin's estimates, this could reduce the on-chain cost for users to enter the Lightning Network by an order of magnitude. It's like how previously everyone had to drive on the highway themselves, but now they can take a bus and share an entrance ramp, resulting in vastly improved efficiency. Essentially, this is about expanding the distribution efficiency of Bitcoin "property rights," which is a key step towards its large-scale application.

What's more interesting is that this mechanism can also achieve "non-interactive" channel creation. Imagine that Coinbase can directly open a Lightning Network channel for you and deposit some Bitcoin, while you don't need to be online at all during the process, only to find yourself on the "Lightning Highway" when you log in next time. This smooth user experience is something that was previously hard to imagine.

What are the risks of opening Pandora's box?

It sounds so wonderful, but why has the activation path of BIP-119 been so rough, even leading to a fierce civil war in the community in 2022? The voices of the opponents are equally deafening; they are concerned that this "contract" may become the key to opening Pandora's box.

The loudest alarm comes from concerns about the core values of Bitcoin—censorship resistance and fungibility. Opponents depict a chilling scenario: a heavily regulated centralized exchange that could be compelled by the government to require all users' withdrawals to go to a CTV "contract address." And the funds at this address are stipulated to only flow to other KYC (Know Your Customer) "whitelisted" addresses. In this way, the Bitcoin world would be invisibly divided into two parallel universes of "clean" and "contaminated," fundamentally eroding its foundation as a global neutral currency. This concern of the "slippery slope fallacy" is less about the technology itself and more about a profound anxiety over whether Bitcoin can withstand future incursions by state-level powers.

Another major opposing camp consists of the technical "perfectionists." They believe that while CTV is useful, it is "not versatile enough." They advocate that rather than activating a functionally limited "dedicated wrench" (CTV), it would be better to spend more time developing a more flexible and powerful "Swiss Army knife" (such as another widely discussed proposal OP_CAT). They worry that launching a "half-baked" solution in a rush today might lead to it becoming a neglected "zombie code" in the future, leaving a permanent technical debt for the Bitcoin protocol that pursues minimalism and elegance. This reflects a profound divergence between "incrementalism" and "holism" in the philosophy of Bitcoin development.

Of course, there are those staunch "Bitcoin maximalists." In their eyes, the value of Bitcoin lies precisely in its simplicity and immutability. As one community member said, "What Bitcoin 'cannot do' is more important than what it 'can do.'" They view any actions that increase the complexity of the protocol as heretical, believing that it would expand the potential attack surface. In 2022, when the proposer of BIP-119 attempted to push for activation through a "fast-tracking" mechanism, he faced strong opposition from many, including Bitcoin evangelist Andreas Antonopoulos. Antonopoulos explicitly stated that his opposition was not to the technology itself, but to the arrogant process that "disrespected community consensus."

A Political Game of Governance

This turmoil ultimately ended with the failure of the activation attempt in 2022, but it also provided the community with a valuable lesson: in the world of Bitcoin, the quality of the code is certainly important, but the process of reaching consensus is the key to determining life and death.

Fast forward to 2025, the proponents of BIP-119 have clearly learned their lesson, coming back with a more humble attitude and a more mature strategy. In June of this year, an open letter signed by 66 well-known developers and representatives from institutions (including the previously mentioned Jameson Lopp and custody giant Anchorage) called on the community to re-examine BIP-119. This time, they are no longer fighting alone, but have formed a "Builders Alliance". Smarter still, they bundled BIP-119 with another less controversial and complementary proposal, BIP-348. This is undoubtedly a clever political maneuver that forces opponents to weigh the pros and cons: does rejecting BIP-119 also mean abandoning another beneficial upgrade?

Regardless of the final fate of BIP-119, the long debate surrounding it has been highly valuable. It serves as a mirror, clearly reflecting the complexities, challenges, and evolution of Bitcoin's decentralized governance. It forces every participant to contemplate where the sacred balance lies between efficiency and security, evolution and stability, pragmatism and idealism.

Ultimately, the future of Bitcoin may not depend on the activation of a specific opcode, but rather on whether this community, composed of millions of "invisible hands" around the world, can find the correct course to the stars and the sea through repeated intense collisions and difficult compromises. This soul-searching inquiry about "contracts" continues, and each of us is a witness to this great social experiment.