Is BIP 119 a serious attack on Bitcoin?
|- The implementation of BIP 119 could negatively impact the fungibility of BTC and increase regulatory control on the asset.
- Bitcoin Improvement Proposal 119 would introduce covenants and limit BTC transfers to whitelisted addresses.
- Analysts predict Bitcoin price rally as the asset begins its uptrend, set a target of $42,500.
BIP 119 could place a covenant on where Bitcoin transferred to a wallet can be spent or how it can be spent. Proponents believe a condition placed on spending could result in Bitcoin losing its fungibility, or exchange value, one of its unique propositions.
Bitcoin could lose its fungibility to BIP 119
Bitcoin Improvement Proposal (BIP) 119 places covenants or spending conditions on Bitcoin. This would imply, a given quantity of Bitcoin sent to a user's wallet address can only be spent if the spending conditions are met.
A certain op code in BIP 119 would impose restrictions on a transaction. If Bitcoin is sent from address A to address B, "B" can only send it to a whitelist of addresses on receipt of the BTC. Since this creates two different classes of UTXOs, it affects the fungibility of Bitcoin.
Bitcoin is considered a fungible asset because every BTC unit has similar functionality and quality. The introduction of a covenant that changes the properties of some Bitcoin, in terms of where they can be spent and transferred, would create two different asset classes within BTC.
Interestingly, the restriction imposed through a covenant could allow financial regulatory authorities and governments to restrict Bitcoin transactions to whitelists or verified addresses and track them further, hurting privacy and equal access of users.
While the introduction of BIP 119 could protect user funds from hack or theft, its impact on the asset's interchangeability and user's privacy.
@DaCrypoGeneral, a crypto analyst and trader, observed a descending wedge reversal breakout and expects BTC to hit the $42,500 target after overcoming resistance at $40,600.
$BTC (4H) update; the price is bullish with Descending wedge reversal breakout, I'm expecting price to trade around $40.6k level
— CRYPTO GENERAL (@DaCryptoGeneral) May 5, 2022
If price breaks $40.6k level then it will pump straight to the next target at $42.5k#BTC pic.twitter.com/JiC86ADlaU
$BTC (4H) update; the price is bullish with Descending wedge reversal breakout, I'm expecting price to trade around $40.6k level
— CRYPTO GENERAL (@DaCryptoGeneral) May 5, 2022
If price breaks $40.6k level then it will pump straight to the next target at $42.5k#BTC pic.twitter.com/JiC86ADlaU
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