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Bitcoin BIP 119 update – why the community revolted

Bitcoin BIP 119 update. A review by a Bitcoin mixer: mixer.money
Bitcoin BIP 119 update – why the community revolted

  1. CheckTemplateVerify (CTV)
  2. Misconceptions about the update
  3. How CTV works
  4. Potential benefits of BIP 119
  5. Potential opportunities for regulators
  6. What stage is BIP 119 at now

In April 2022, Jeremy Rubin published a plan to update bitcoin blockchain BIP 119 based on covenants. A covenant is an agreement that allows you to control the right to dispose of an asset. For example, you can only spend purchased cryptocurrency on specific addresses.

CheckTemplateVerify (CTV)

The first idea to use the CheckTemplateVerify (CTV) strategy was back in 2019 and was then called CheckOutputHashVerify. This update proposal was made to provide control over bitcoin overload so that users could make multiple payments at the same time.

Implementation of a bitcoin payment. BIP 119 update.

But the update had other uses, such as for organizing vaults. In late 2019, it was renamed CTV. The update is a soft-fork, meaning that unupdated nodes will still be able to function on the network as long as its overall capacity ensures compliance with the rules introduced.

BIP 119 lays out a detailed explanation of how the update should be implemented and work. If it is adopted, users will be able to control where bitcoins are spent, automatically, based on bitcoin contracts. Such setup is called an agreement.

The published document sparked heated discussions among bitcoin users and it almost came to a split between supporters and opponents. On the one hand, the idea of the update contradicts the spirit of bitcoin sovereignty, but on the other hand, it can improve the security of the network.

Misconceptions about the update

After the release of the document, there were opinions that anyone would be able to control the expenditure of funds from any wallet. However, this is not the case. Only the owner can set covenants to limit bitcoin spending; e. g., a withdrawal threshold per week or a list of addresses where assets may be transferred.

In other words, the conditions for subsequent spending are determined by the receiving party, not the sending party.

How CTV works

The receiving party creates an address that includes some information and sends it to the sending party. This data at the very least lays out the conditions that someone must meet in order to spend that bitcoin. Since the recipient determines the information used to construct the receiving address, only the recipient can determine the spending conditions required to spend that bitcoin once it arrives at that address. The process of satisfying these spending conditions is usually known as “unlocking” bitcoin withdrawals.

This is how you can determine the number of signatures needed to unlock the funds in your account (create a multi-signature), the term of the unlock. Once all conditions are met, bitcoins can be freely spent.

Potential benefits of BIP 119

By implementing the update, it is possible to create vaults with restricted withdrawals. For the user, this means control over their savings. CTV also describes congestion control, payment pools, and two Lightning Network enhancements.

Potential opportunities for regulators

Most of debate was over the possibility of whitelisting. On the part of regulators and governments, such an update could trigger greater control over bitcoin spending. In the context of cryptocurrency, a whitelist is a set of addresses where the owner can transfer his assets. This protects him from transferring assets to other people’s wallets in case of hacking.

Authoritarian governments can use this feature for total control – users will only be able to send their bitcoins to addresses authorized by someone at the top. It has already been voiced online that CTV could allow governments or exchanges to restrict where the bitcoins they send users when withdrawing funds could be spent, through whitelisting.

This fear came after a speech by prominent Influencer Andreas Antonopoulos, where he commented on the agreement and discussed that agreements can be risky depending on their design.

Andreas Antonopoulos is a bitcoin and blockchain expert.

Antonopoulos said there is a risk of recursive agreements, which in some cases could be used to create black and white lists of bitcoin addresses, potentially jeopardizing bitcoin interchangeability because some BTC coins will be different from others given their ability to spend. But while Antonopoulos did not say it would be possible specifically because of CTV, many people assumed he meant CTV.

What stage is BIP 119 at now

So far, things have gone quiet as no consensus has been found. Rubin first announced the client release, but worded his message not quite correctly and the community exploded. It looked like the fork was already launching. However, Rubin actually intended to release a CTV waiver as well.

Amid all the controversy, the client never came out, and bitcoin community experts recommended finalizing the idea and waiting for a consensus.

The reason for this caution is reluctance to change the bitcoin blockchain. The previous Taproot update increased transaction speeds, but did not affect the core of the network. That is why it was eventually accepted. What awaits BIP 119 is yet to be seen.

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