Bitcoin and many other cryptocurrencies are constantly updated, in the same way as any software. In this way, new functionalities and features are added, or problems, errors and vulnerabilities are solved. The latest update to Bitcoin, called Taproot, improved the network’s ability to create smart contracts and added privacy improvements.
Bitcoin’s BIP-119 proposal seeks to improve the scalability of the network and enable fast payments in large amounts, something that will be necessary when the adoption of the use of Bitcoin becomes widespread.
To continue its evolution, the Bitcoin community long ago presented the BIP-119 proposal, which is intended to address the scaling problem, that is, the ability of Bitcoin to process hundreds of thousands of transactions at the same time.
What is Bitcoin’s BIP-119 proposal?
The BIP-119 scalability proposal was put forward by Jeremy Rubin, a computer programmer at MIT, last year. The proposal seeks to increase the internal capacity of Bitcoin, allowing a highest number of simultaneous transactions, with less effort and reduced emission costs for the network.
To do this, you will implement the command «OP_CHECKTEMPLATEVERIFY (OP_CTV)«, which will allow the transactions to be separated into two parts: a sending transaction and a receiving one. In this way, batch transactions with multiple outputs, which could saturate the network, would be avoided. The “OP_CTV” command would be processed through a link between both transactions, where the recipient would have a lower cost, to distribute the funds efficiently with the multiple outputs that it may have.
The “OP_CTV” command introduces “covenants” or agreed transactions, agreements on how one Bitcoin is spent successively through a series of transactions, regardless of the authority of any of the private keys over the cryptocurrencies involved. In this way, they can group many transactions in a single “covenant” and manage them thanks to the smart contract linked to them.
This solution was already proposed in 2014 and was widely criticized due to the fact that Bitcoin smart contracts they do not have an efficient language, which could lead to fungibility problems and be a risk for the stability of the network. However, BIP-119 proposes a simpler “covenant” system, called “Template” that significantly reduces risks.
This proposal could prove to be very beneficial for cryptocurrency exchanges. These platforms usually handle thousands of requests to buy and sell Bitcoin every minute. Therefore, at times of high demand, they could issue an “OP_CTV” transaction, which would group several sale or purchase transactions, to speed up the process, save commissions and not saturate the network.
Is the BIP-119 proposal viable?
For now, although the proposal has received a positive response from the community, it is still in a very early stage, since Rubin himself has indicated that work still needs to be done on a restructuring of the Bitcoin “mempool”, in create a language for smart contracts, develop open software in this language to improve interfaces and safeguard funds with CTV.