BIP-110 puts Bitcoin governance fight back in focus

Bitcoin users are debating BIP-110, a proposed rule change that would limit several ways people place non-financial data inside transactions. For everyday investors, the fight matters because Bitcoin’s value story depends partly on the network staying predictable, open, and hard to change.

BIP-110, short for Bitcoin Improvement Proposal 110, would alter Bitcoin’s consensus rules. Consensus rules are the shared technical requirements that determine which transactions and blocks the network accepts as valid.

The proposal has pulled in prominent voices across Bitcoin, including developer Luke Dashjr, Blockstream CEO Adam Back, Strategy Executive Chairman Michael Saylor, Casa Chief Security Officer Jameson Lopp, and Bitcoin advocate Samson Mow, according to the debate cited around the proposal.

What BIP-110 would do

Bitcoin transactions can carry more than payments. They can include text, images, token-related metadata, and other information through scripts and witness data, which is transaction information used by Bitcoin nodes to verify spending conditions.

BIP-110 would be a soft fork, meaning it would tighten the rules while aiming to remain compatible with older versions of the software. The proposal would limit most new transaction outputs to 34 bytes, bring back an 83-byte limit for OP_RETURN outputs, cap certain witness elements at 256 bytes, and temporarily restrict several Taproot features used for inscriptions.

OP_RETURN is a Bitcoin transaction field often used to attach small pieces of data. Taproot is a Bitcoin upgrade that expanded how transaction conditions can be expressed. Inscriptions are Bitcoin-based digital artifacts often compared with NFTs on networks such as Ethereum and Solana.

Supporters of BIP-110 say the change would cut down on blockchain spam and keep Bitcoin focused on its role as money. Critics say the proposal would cause some transactions that are valid today to be rejected under new rules, raising censorship concerns and potentially creating the conditions for a chain split, where different groups follow incompatible versions of Bitcoin.

Why critics are pushing back

Michael Saylor wrote on X that BIP-110 turns a dispute over spam into a consensus change that could invalidate some current fee-paying transactions. He argued that the precedent is more concerning than the spam issue itself.

Jameson Lopp made a similar case in a February blog post. Lopp argued that BIP-110 would weaken Bitcoin’s censorship resistance and predictability by showing that the protocol can be changed to block transactions that some participants view as undesirable.

Adam Back wrote on X that Bitcoin’s design gives users freedom, but also limits their ability to force preferences on the rest of the network. Back said supporters can create a separate fork if they want, while arguing that Bitcoin’s own consensus process is built to resist unwanted changes.

Miner support remains low

The proposal’s mandatory signaling period begins in August. So far, only 1% of miners have shown support for BIP-110, according to the BIP-110 monitoring dashboard.

Miner signaling is a public way for miners to indicate whether they support a proposed rule change. Low signaling does not end a debate by itself, but it shows that the proposal has not gained broad miner backing at this stage.

The dispute traces back to the rise of Ordinals in early 2023, which made inscriptions a major topic inside Bitcoin. BIP-110 has since become one of the network’s most visible governance arguments in years, with the core question extending beyond data storage: who gets to decide what Bitcoin should accept as valid use.

This story draws on original reporting from Decrypt.