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

Written by: Oliver, Mars Finance

In the world of cryptocurrency, Ethereum and its ecosystem always resemble a youth eager to "make things happen," constantly attracting the market's attention with novel DeFi legos and NFT artworks. In contrast, Bitcoin is more like a silent and deep elder, rarely changing, but each tiny movement is enough to trigger a profound earthquake throughout the industry. Since the major upgrade known as "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 grand 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 become an unchanging digital gold, or a financial operating system that can evolve and adapt over time?

A "smart will" from the future

To understand the magic of BIP-119, let's imagine a scenario. Suppose you are a far-sighted Bitcoin whale who wishes to pass on your assets to the next generation, but you worry that they might be young and reckless, squandering their inheritance. 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" for your Bitcoin UTXO (which can be understood as your "digital check") 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 10 at a time to my son's designated address for living and studying starting from the year 2040." Any attempt to execute a transaction that does not conform to 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, where the private key is no longer the sole authority.

The most intuitive application of this feature is the personal vault known as "Smart Vaults." Currently, if your private key is stolen, it is akin to a catastrophe. However, 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), much 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 more secure custody methods," which is undoubtedly a tremendous boon for attracting institutions and long-term holders who regard asset security as vital.

Paving the "entrance ramp" for "lightning speed"

However, if the intelligent 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 a "gateway" bottleneck: everyone who wants to get on board has to first make a transaction on the congested main highway (the Bitcoin main chain) to buy themselves a "ticket" (create a channel). When thousands of people want to board at the same time, this main highway naturally becomes congested.

CTV cleverly addresses this issue through a mechanism called "Channel Factories." It allows multiple users to "pool" their resources on the road. Everyone can chip in money and, through a single on-chain transaction, collectively create a shared UTXO, and then establish countless lightning channels among each other off-chain based on this shared foundation. According to its designer Jeremy Rubin's estimates, this can reduce the on-chain cost for users entering 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, leading to vastly different efficiency. Essentially, this is about enhancing the distribution efficiency of Bitcoin's "property rights" and is a key step towards its large-scale application.

What’s even more interesting is that this mechanism can achieve the creation of "non-interactive" channels. Imagine that Coinbase can directly open a Lightning Network channel for you and deposit some Bitcoin, all while you don’t need to be online at any point. The next time you log in, you’ll be pleasantly surprised to find yourself on the "Lightning Highway." This smooth user experience was previously unimaginable.

What are the risks of opening Pandora's box?

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

The loudest alarm comes from concerns about Bitcoin's core values—censorship resistance and fungibility. Opponents paint a chilling picture: a heavily regulated centralized exchange that could be compelled by the government to require all user withdrawals to go to a CTV "contract address." The funds in this address would then be mandated to flow only to other KYC (Know Your Customer) "whitelisted" addresses. As a result, 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 a "slippery slope fallacy" is less about the technology itself and more about a deep-seated anxiety over whether Bitcoin can withstand future incursions by state-level powers.

The other major faction of opponents consists of the technical "perfectionists." They believe that while CTV is useful, it is "not universal enough." They argue that instead of activating a functionally limited "specialized wrench" (CTV), it would be better to spend more time developing a more flexible and powerful "Swiss Army knife" (for example, another much-discussed proposal OP_CAT). They are concerned that rushing to launch a "half-finished product" today may lead to it becoming an abandoned "zombie code" in the future, leaving behind permanent technical debt for the Bitcoin protocol, which pursues minimalism and elegance. Behind this is a profound divergence in the Bitcoin development philosophy between "incrementalism" and "holism."

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 put it: "What Bitcoin 'cannot do' is more important than what it 'can do'." They view any attempts to increase the complexity of the protocol as heresy, believing it expands the potential attack surface. In 2022, when the proposer of BIP-119 attempted to forcibly push for activation through a "fast-tracking" mechanism, they faced strong opposition from many, including Bitcoin evangelist Andreas Antonopoulos. Antonopoulos explicitly stated that his objection was not to the technology, but to the arrogant process that "disrespects community consensus."

A political game about governance

This turmoil ultimately ended with the failure of the activation attempt in 2022, but it also taught the community a valuable lesson: in the world of Bitcoin, while the quality of the code is certainly important, the process of reaching consensus is the key factor that determines survival.

Fast forward to 2025, the proponents of BIP-119 have clearly learned their lessons, returning with a more humble attitude and a more mature strategy. In June of this year, an open letter signed by 66 prominent developers and representatives of institutions (including Jameson Lopp mentioned earlier and custodial giant Anchorage) called on the community to reevaluate BIP-119. This time, they are not going solo 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 clever political maneuver that forces opponents to weigh the pros and cons: does rejecting BIP-119 also mean giving up another beneficial upgrade?

Regardless of the final fate of BIP-119, the long debate surrounding it has been immensely valuable. It acts like a mirror, clearly reflecting the complexities, challenges, and evolution of Bitcoin's decentralized governance. It forces every participant to ponder where that 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 any single opcode, but rather on whether this community, composed of millions of "invisible hands" from around the world, can find the correct course towards the stars and the sea through intense collisions and difficult compromises. This soul-searching inquiry about "contracts" continues, and each of us is a witness to this grand social experiment.