Summary
- BIP-110 aims to limit various methods of including non-financial data in Bitcoin transactions.
- Proponents argue it would decrease blockchain spam, while opponents contend it could invalidate valid transactions and lead to a network split.
- Although it has garnered minimal support from miners, BIP-110 has sparked significant discussions regarding Bitcoin governance.
A contentious proposal to modify Bitcoin's consensus rules has created a rift among developers, miners, companies, and users regarding the network's future direction and decision-making authority.
The crux of the debate revolves around Bitcoin Improvement Proposal 110, known as BIP-110. Should it be enacted, BIP-110 would impose temporary restrictions on various methods for embedding arbitrary data within Bitcoin transactions.
Proponents assert that the proposal would help mitigate blockchain spam and strengthen Bitcoin’s monetary function, while detractors warn that it could invalidate legitimate transactions and risk a network split.
This debate has elicited responses from notable figures in the Bitcoin community, including developer Luke Dashjr, Blockstream CEO Adam Back, Strategy Executive Chairman Michael Saylor, Casa Chief Security Officer Jameson Lopp, and Bitcoin advocate Samson Mow.
“There are 110 things more dangerous to Bitcoin than spam. BIP 110 turns a spam dispute into a consensus change that would invalidate some currently valid, fee-paying transactions,” Saylor stated on X. “That precedent is the danger. We should save our energy for threats that really matter.”
Proposed Changes under BIP-110
Bitcoin transactions can encompass more than just monetary exchanges; they can also carry text, images, token metadata, and various types of information using transaction scripts and witness data.
As a soft fork, BIP-110 seeks to tighten Bitcoin's consensus rules by restricting several methods for embedding data. The proposal would limit new transaction outputs to 34 bytes, reinstate an 83-byte cap for OP_RETURN outputs, limit certain witness elements to 256 bytes, and temporarily restrict several commonly used Taproot features for inscriptions. (Inscriptions can be likened to NFTs on other blockchain networks like Ethereum and Solana.)
Opponents argue that BIP-110 could render some currently valid transactions invalid under Bitcoin's consensus rules and set a troubling precedent for future protocol modifications. Jameson Lopp expressed in a February blog post that BIP-110 could undermine two fundamental attributes of Bitcoin: censorship resistance and predictability.
“Bitcoin's strength lies in its censorship resistance and predictability,” Lopp noted. “BIP-110 signals that the protocol can be altered to censor subjectively ‘undesirable’ transactions, eroding its image as permissionless programmable money.”
The signaling period for BIP-110 will commence in August, but so far, only 1% of miners have indicated support for the proposal, based on the monitoring dashboard associated with it here.
Blockstream's Adam Back contended that Bitcoin's decentralized architecture prevents individuals from imposing their preferences on others and that its technical consensus process is deliberately resistant to change. He remarked that while supporters may create their own fork, "Bitcoin won't be joining it."
“Now the tough pill, which is unfortunately true,” Back wrote on X. “If you won't listen to reason, educate yourself, learn, the same radical freedom applies to you: your permissionless recourse is to club together and create a fork.”
The Origins of the Dispute
The current contention traces back to early 2023 with the introduction of Ordinals, a protocol developed by Casey Rodarmor that enables images, text, video, and other digital content to be inscribed directly onto individual satoshis, the smallest unit of Bitcoin. Ordinals leverage features from Bitcoin's SegWit and Taproot upgrades to create NFT-like assets directly on the Bitcoin blockchain.
As Ordinals and BRC-20 tokens gained traction, the demand for Bitcoin block space surged, resulting in higher transaction fees. Supporters claim these fees have provided additional revenue for miners and bolstered Bitcoin's long-term security.
Conversely, critics, including Dashjr, have characterized inscriptions as spam, arguing they exploit the Bitcoin network rather than serving as valid financial transactions.
Mow Calls for Consensus
In a recent essay on X titled The Bitcoin Alliance, Samson Mow urged Bitcoin participants to view themselves as an alliance rather than merely a community, emphasizing that developers, miners, companies, educators, and users each play unique roles in the network's ecosystem.
“During the Blocksize War, there was never this ‘if you're not with us, you're against us’ mentality on our side,” he noted. “The small block camp never had to coerce anyone to join. We just all "got it" and were confident in our position.”
The Blocksize Wars (2015–2017) focused on whether to expand Bitcoin's 1 MB block size limit to accommodate more transactions per block. Ultimately, the "small block" faction prevailed, leading "big blockers" to fork off and create Bitcoin Cash in 2017 and subsequently Bitcoin SV in 2018.
Mow expressed that while he shares concerns about blockchain spam, he opposes BIP-110 on the grounds that protocol changes should require widespread consensus. He also criticized Bitcoin Core developers for their approach to recent OP_RETURN policy changes, suggesting that both sides have contributed to the rising tensions.
“The way they handled the OP_RETURN change was full of stupid mistakes, from banning people on GitHub to the ninja ACKs,” he wrote. “Any normal person could have predicted the reaction from the plebs. People store their time and value in Bitcoin. Anything that appears to threaten that will get people up in arms.”