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

Author: Oliver, Mars Finance

In the world of cryptocurrency, Ethereum and its ecosystem always resemble a teenager eager to "stir things up," constantly attracting market attention with novel DeFi Lego and NFT artworks. In contrast, Bitcoin is more like a silent, deep-sea elder. It rarely 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 about its future is surging, stirred by a technical proposal numbered BIP-119.

At the core of this proposal is an ancient and powerful magic known as "Covenants." It is expected to reach 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; it feels more like a collective interrogation of Bitcoin's identity: should it remain a timeless digital gold, or evolve into a financial operating system that can adapt and progress 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 far-sighted Bitcoin whale wishing to pass on your assets to future generations, but you worry that they might be reckless and extravagant. In today's Bitcoin world, you are powerless. Once the private key is handed over, control of the assets is completely transferred. However, if BIP-119 is activated, you can establish a "smart will" from the future for your Bitcoin UTXO (which can be understood as your "digital check").

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 way in the future. For example, you could set a template stating, "These 1000 Bitcoins can only be transferred out to my son's designated address at a rate of 10 per year, starting in 2040, for living and learning." Any transaction attempt that does not conform to this "template" will be ruthlessly rejected by the entire Bitcoin network. It’s like placing a time lock and rule lock on your assets, forged by global consensus; the private key is no longer the sole scepter.

The most intuitive application of this feature is the personal vaults known as "Smart Vaults." Currently, if your private key is stolen, it is akin to a disaster. But in the world of CTV, even if a hacker obtains your private key, they cannot abscond with all your wealth at once. They can only act like a disciplined "good child," transferring funds according to your pre-set, extremely slow withdrawal plan (for example, 0.1 BTC per week). This undoubtedly buys 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 tremendous boon for attracting institutions and long-term holders who view asset security as vital.

Paving the "Entrance Ramp" for "Lightning Fast"

However, if the smart vaults are merely an appetizer for CTV's initial foray, 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 Bitcoin's payment efficiency, but it has always faced an "entry" bottleneck: anyone wanting to hop on must first conduct a transaction on the congested main road (the Bitcoin main chain) to buy a "ticket" (create a channel). When thousands of people want to get on at the same time, this main road naturally becomes clogged.

CTV cleverly addresses this issue through a mechanism called "Channel Factories." It allows multiple users to "carpool" onto the road. They can pool funds through a single on-chain transaction to create a shared UTXO, and then establish countless Lightning channels among themselves off-chain based on this shared foundation. According to its designer Jeremy Rubin, this can reduce the on-chain cost for users entering the Lightning Network by an order of magnitude. It’s like everyone previously had to drive their own car onto the highway; now they can take a bus together, sharing an entrance ramp, resulting in vastly improved efficiency. Essentially, this expands the distribution efficiency of Bitcoin's "property rights," marking a crucial step towards large-scale application.

Even more interestingly, this mechanism can achieve "non-interactive" channel creation. Imagine that Coinbase could directly open a Lightning Network channel for you and deposit some Bitcoin, all without you needing to be online, and when you log in next time, you are pleasantly surprised to find yourself on the "Lightning Fast" highway. This seamless user experience was previously unimaginable.

The Risks of Opening Pandora's Box?

It sounds so wonderful; why then has the path to activating BIP-119 been so rocky, even sparking a fierce civil war in the community in 2022? The voices of opposition are equally deafening, as they worry that this "Covenant" could become the key to opening Pandora's box.

The loudest alarm bells come from concerns about Bitcoin's core values—censorship resistance and fungibility. Opponents paint a chilling scenario: a heavily regulated centralized exchange could be forced by the government to require all users' withdrawals to go into a CTV "contract address." The funds in this address could then be mandated to flow only to other KYC (Know Your Customer) "whitelisted" addresses. In this way, the Bitcoin world would be invisibly divided into two parallel universes: "clean" and "contaminated," fundamentally eroding its foundation as a global neutral currency. This concern about the "slippery slope" is less about the technology itself and more about a deep-seated anxiety over whether Bitcoin can withstand future state-level infiltration.

Another faction of opponents consists of technical "perfectionists." They believe that while CTV is useful, it is "not general enough." They argue that instead of activating a functionally limited "specialized wrench" (CTV), more time should be spent developing a more flexible and powerful "Swiss Army knife" (such as another much-discussed proposal, OP_CAT). They worry that hastily launching a "half-baked" feature today could lead to it becoming neglected "zombie code" in the future, leaving permanent technical debt for those pursuing simplicity and elegance in the Bitcoin protocol. This reflects a profound divide in Bitcoin's development philosophy between "incrementalism" and "holism."

Of course, there are also the staunch "Bitcoin maximalists." In their eyes, Bitcoin's value lies precisely in its simplicity and immutability. As one community member put it, "What Bitcoin 'cannot do' is more important than what it 'can do'." They view any action that increases protocol complexity as heretical, believing it expands the potential attack surface. In 2022, when the proponents of BIP-119 attempted to force activation through a "fast-tracking" mechanism, they faced strong opposition from many, including Bitcoin evangelist Andreas Antonopoulos. Antonopoulos clearly 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 provided a valuable lesson for the community: in the world of Bitcoin, while the quality of code is undoubtedly important, the process of reaching consensus is the key determinant of life and death.

Fast forward to 2025, and the proponents of BIP-119 have clearly learned their lesson. They have returned with a more humble stance and a more mature strategy. In June of this year, an open letter signed by 66 prominent developers and institutional representatives (including the aforementioned Jameson Lopp and custody giant Anchorage) called on the community to re-examine BIP-119. This time, they are no longer going it alone but have formed a "Builders Alliance." More cleverly, they have bundled BIP-119 with another less controversial, complementary proposal, BIP-348. This is undoubtedly a shrewd political maneuver, forcing opponents to weigh the pros and cons: does rejecting BIP-119 also mean giving up another beneficial upgrade?

Regardless of BIP-119's ultimate fate, the lengthy debate surrounding it is immensely valuable. It serves as a mirror, clearly reflecting the complexities, challenges, and evolution of decentralized governance in Bitcoin. It compels every participant to ponder 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 single opcode but rather on whether this community, composed of millions of "invisible hands" worldwide, can find the correct course to the stars and the sea through repeated intense collisions and difficult compromises. This soul-searching inquiry about "Covenants" continues, and each of us is a witness to this grand social experiment.