Monday, May 29

What can I do with BIP-119, the new proposed update for Bitcoin?

In December 2021, after several years of work and development, the developer Jeremy Rubin proposed to activate the Bitcoin Improvement Proposal 119 (BIP-119) for this year 2022.

The idea polarized the opinions of the enthusiasts and followers of the development of Bitcoin, between those who think that this proposal is ready to be implemented in the protocol and those who think that it is too early to do so.

One of the main arguments of this last group points to the lack of dissemination and knowledge, not only of what BIP-119 is, but also of its practical applications or use cases. What is its utility? What is it for?


Before answering those questions, what we propose to do in this article, let’s review some concepts. The BIP-119 enter a new Bitcoin script or command called OP_CHECKTEMPLATEVERIFY u OP_CTV, consisting of a template or route to spend bitcoins according to parameters of time, addresses, amounts, frequency and much more.

This means that OP_CTV allows us to schedule the spending of some bitcoins stored in a wallet for a certain date, or with a certain recurrence (for example, every two days, every year, etc.), or send them only to one or several addresses. and no more.

In this way, the programmatic capabilities of Bitcoin are greatly expanded, as far as our needs and imagination can go. Some enthusiasts of this proposal refer to OP_CTV as a fully functional, automatable and composite smart contract, and even more secure than contracts on other platforms such as Ethereum, in their opinion.

So what are some of the BIP-119 use cases?

Smart cold wallets:

Multi-signature wallets and hardware wallets can be defined as a very useful and safe vault or safe to store our bitcoins in the long term. However, that is the problem: they do not have much utility to use the coins stored there in our day to day, since once this hardware wallet is configured, it requires a somewhat tedious process to access them again.

This was pointed out by the zensored enthusiast in a tutorial post on OP_CTV, where mentions the concept of smart vaults among other possible use cases of BIP-119.

For example, it establishes that a cold wallet (that is, without constant connection to the Internet) can be configured so that it can only send bitcoins to a certain address that you own, so that in case your device is stolen, attackers have no way to withdraw the bitcoins.

Another case is that of savings or inheritance funds, where you can store your bitcoins in a cold wallet so that, when you die, you can leave an inheritance in BTC to your children.

How does this savings fund work? You program the cold wallet so that on a certain date, it starts sending the BTC to the addresses of your children’s wallets. Thus, the fights in courts and the intermediation of the State are over.

The third use case around cold wallets is that of an “automated hot wallet”; that is, a cold wallet where you can store your BTC for the long term safely, but program it so that it is sporadically unlocked and you can use an amount of those savings with an application or wallet on your mobile phone. If you don’t need the funds right now, the wallet can be locked again after a while, he says. zensored on his blog.

Transaction scalability solutions:

One of the use cases described by Jeremy Rubin it targets transaction scalability in a way that was previously not possible.

Basically, it allows batch transactions for a very small cost, at a time when transaction fees increase due to the demand for space in the blocks of the chain (blockchain).

How is this achieved? Take the case of an exchange that needs to clear funds to hundreds of users at once. If the exchange makes a transaction with many outputs (UTXO, User Transaction Output) -that is, a transaction directed to the wallets of multiple users- this would increase the size of the transaction in terms of weight and therefore the commissions to be paid.

On the right, the diagram of controlled congestion transactions possible with OP_CTV Source:
On the right, the diagram of controlled congestion transactions possible with OP_CTV | Fountain:

OP_CTV would allow you to create a lightweight transaction with hundreds of recipients that only needs one confirmation. However, these bitcoins would not be spendable for all of their recipients immediately. Let’s say, the transaction would be timed to ‘release’ these payments once the fees go down, allowing the recipient users to spend their coins at that time.

There are other use cases yet to be developed and discussed. It is important to clarify that BIP-119 adds capabilities to Bitcoin, but that does not imply that if it were activated, there would be applications with services fully deployed around OP_CTV at that time.

As with Taproot, Bitcoin’s most recent update, the industry that makes use of this protocol should find the usefulness of OP_CTV based on their needs and requirements.

Since last January 11, 2022, BIP-119 has been openly discussed, in terms of its capabilities, quality and development of its code and possible activation and implementation mechanisms in Bitcoin.

Even, as we reported in CriptoNoticias, the community has raised more than 3 BTC to give to those who find technical failures or errors (bugs) in the BIP-119 code.