Bitcoin’s temporary soft-fork proposal, BIP-110, has struggled to attract broad support, but its significance extends beyond whether it is ultimately implemented. Supporters see the proposal as a principled defence of Bitcoin’s monetary purity against growing non-payment data use, while critics see a risky intervention that could threaten chain continuity, neutrality and economic coordination. For institutions, the episode reinforces a central part of Bitcoin’s adoption case: its governance may be slow and contested, but its resistance to rushed or narrow rule changes is what helps preserve confidence in the network.
Bitcoin Improvement Proposal 110 — or BIP-110 — is a temporary soft-fork proposal that aims to restrict the amount of arbitrary or non-payment data that can be included in bitcoin transactions. It builds on an earlier dispute over OP_RETURN limits, transaction filtering and Bitcoin Knots, which raised a similar question: should valid, fee-paying transactions be treated differently simply because of how they use block space?
That debate echoes Bitcoin’s 2015-2017 Blocksize Wars, when arguments over capacity and fees escalated into a wider conflict over governance and who decides Bitcoin’s future.
BIP-110 raises the stakes again, shifting the argument from what transactions the network’s nodes should relay by default to what transactions Bitcoin should recognise as valid at all.
As institutional interest in Bitcoin accelerated around the ETF cycle, much of the focus naturally centred on custody, liquidity, regulation, market access and Bitcoin’s fixed supply. BIP-110 points to a less visible but equally important part of the investment case: how Bitcoin handles contested attempts to change its own rules. For institutions assessing bBitcoin as an asset or infrastructure, this is not only a technical dispute. It is a test of Bitcoin’s rule stability, showing that even proposals framed as defending the network cannot easily change its core rules without broad agreement.
What BIP-110 Would Change
BIP-110 would limit the ways transactions can carry arbitrary data, rather than simply transfer bitcoin, by capping the size of new transaction outputs, limiting OP_RETURN fields and restricting other script-based data pushes. Unspent Transaction Outputs (UTXOs) created before activation would be grandfathered in, and the rules would expire after 52,416 blocks or roughly one year, unless a later consensus change extended them.
The restrictions would also go beyond simple data caps. If activated, it will impact parts of Taproot, the 2021 Bitcoin upgrade that expanded Bitcoin’s scripting capabilities, including certain conditional script paths. That broader scope is one reason critics argue the proposal could affect existing wallet or application assumptions and more significantly, some bitcoin holders.
The proposal responds to increased use of Bitcoin block space for non-payment data. Ordinals, BRC-20 tokens and Runes have used transaction structures to carry information unrelated to direct bitcoin transfers since 2023, contributing at various points to on-chain activity and fee pressure.
The dispute over arbitrary data use intensified around the October 2025 release of Bitcoin Core v30. This client version made default data-carrier policy more permissive by allowing multiple OP_RETURN outputs for relay and mining and raised the default datacarriersize setting from 83 bytes to 100,000 bytes. These were policy changes rather than consensus changes, meaning transactions outside a node’s default relay policy could still be valid under Bitcoin’s consensus rules.
The Case for Protecting Bitcoin’s Monetary Function
Dated 5 December, 2025 and published under the pseudonym Dathon Ohm, with Luke Dashjr credited for the original draft, BIP-110 is framed primarily as a “defence of Bitcoin’s monetary use case”.
According to this view, block space is fixed and scarce, so every byte used for non-monetary purposes is unavailable for monetary settlement. Supporters also argue that continued growth in data-heavy use could raise the cost of running a node, potentially concentrating validation among better-resourced operators.
Many critics of the proposal accept the premise that Bitcoin’s base layer is primarily monetary settlement infrastructure. The dispute lies in what follows.
For BIP-110’s advocates, treating scarce block space as a general-purpose data store represents a form of monetary drift that risks weakening Bitcoin’s role as sound money. Restricting non-payment data would, in their view, push the protocol back toward its core monetary purpose.
Why Critics See BIP-110 as Risky
Many of BIP-110’s staunchest critics agree that arbitrary data is undesirable. Their objection is that changing consensus rules to restrict transaction structures creates larger risks around continuity, neutrality and coordination.
Developer Jameson Lopp has framed his opposition around Bitcoin’s value as a dependable anchor for other systems. Blockstream CEO Adam Back has meanwhile argued that the proposal is a “literal downgrade” that could disrupt existing users and applications, including edge cases involving UTXOs, Miniscript and OP_IF, while setting a precedent for filtering transactions according to how a subset of participants believes Bitcoin should be used.
The risk is not only technical. A rule enforced by only part of the network can create divergent views of the valid chain, and operational uncertainty if miners, nodes, exchanges and custodians do not broadly agree.
Some objections are also specific to BIP-110’s design, including its treatment of edge-case Miniscript Tapleaves and its proposed restriction on creating new pay-to-public-key (P2PK) outputs, an output type dating to Bitcoin’s early history.
Public signalling has so far failed to demonstrate broad support from the largest mining pools. Bitcoin Core has not endorsed BIP-110 and a submitted implementation has not been merged. Mark “Murch” Erhardt, the BIP editor who assigned the proposal its number, has stressed that assignment was a process decision rather than an endorsement, while publicly criticising the proposal itself. Bitcoin Core does not decide alone what Bitcoin is, but its absence from a contested activation effort remains significant.
What The Activation of BIP-110 Will Really Test
BIP-110’s activation design includes an early lock-in path if 55 percent of blocks in a two-week difficulty period signal support. If that threshold is not reached, the proposal also includes a later mandatory-signalling phase expected in the first half of August 2026.
Under that design, nodes enforcing BIP-110 would reject blocks that fail the required signalling conditions during the relevant phase, while non-enforcing nodes would continue applying existing rules. Voluntary miner signalling has remained in the low single digits since May, far short of the 55 percent threshold needed for early lock-in. Node-level readiness is harder to measure, since public node counts do not necessarily show how many nodes are specifically configured to enforce BIP-110.
A mandatory-signalling window is not the same thing as a viable economic chain. Without substantial hashrate and economic support, rejecting non-signalling blocks would not create a practical settlement network. Miners, nodes, exchanges and custodians may also differ in how they recognise or enforce the rule.
For market infrastructure, the question is not only how many blocks carry a signal, but whether miners, nodes and major economic actors converge on the same rules. A contested activation can raise questions around deposits, withdrawals, custody and liquidity fragmentation.
There is also the question of whether the restrictions would achieve their stated objective. Peter Todd responded to the original draft by embedding the full text of the BIP itself into a transaction that complied with its own proposed rules, demonstrating how easily the restrictions can be bypassed. If similar workarounds are viable, that would mean the proposal could change the cost and form of data publication without necessarily eliminating it.
What BIP-110 Shows About Bitcoin Governance
BIP-110’s supporters begin from a defensible concern: Bitcoin block space is scarce, node operation has costs, and the network’s monetary function is not automatically protected from every technically valid use. Yet that argument has not been sufficient to produce broad agreement on the proposed remedy.
Part of the resistance reflects Bitcoin’s general conservatism. Part of it is specific to BIP-110: its scope extends beyond headline data limits, compatibility concerns remain, and potential workarounds challenge the idea that consensus restrictions can cleanly separate monetary from non-monetary use.
For institutions and market participants, it is an important distinction. Bitcoin’s governance can look slow, fragmented and unyielding from the outside, but there is no central authority able to settle the dispute, no single implementation that can redefine the network by decree, and no miner vote that automatically guarantees economic acceptance.
That makes Bitcoin difficult to redirect, even when a proposal is framed as protecting its monetary purpose. It also explains why contested change is treated so cautiously. For an asset increasingly integrated into market infrastructure, credibility depends not only on what Bitcoin is used for, but on how hard it is to change the rules that define it.
Whatever happens during the August activation period, the arbitrary data debate is unlikely to disappear. BIP-110 has already shown how difficult it is to settle that debate through consensus change. Without broad agreement, even proposals framed as defending Bitcoin’s monetary purpose face a formidable barrier. That difficulty is not a sign that Bitcoin cannot change, but a reminder that changes to its core rules have to clear an unusually high bar.
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