Key facts
- BIP-110 proposes to restrict methods for embedding non-financial data in Bitcoin transactions.
- Supporters believe the proposal will reduce blockchain spam and reinforce Bitcoin's function as money.
- Critics argue BIP-110 could invalidate legitimate, fee-paying transactions and lead to a network split.
- The proposal would impose new size limits on transaction outputs, OP_RETURN outputs, and witness elements.
- Miner support for BIP-110 is currently very low, with only 1% signaling.
- The debate was sparked by the popularity of Ordinals and BRC-20 tokens, which increased demand for block space.
A significant governance debate is unfolding within the Bitcoin community surrounding Bitcoin Improvement Proposal 110 (BIP-110), which aims to restrict the embedding of non-financial data within transactions. Supporters, including some developers, argue that the proposal is necessary to combat blockchain spam and maintain Bitcoin's focus as a monetary asset. They contend that the current use of transaction space for data like inscriptions is a form of spam that inflates fees and clutters the blockchain.
Conversely, critics, such as Michael Saylor and Jameson Lopp, express strong opposition. They argue that BIP-110 would invalidate currently valid transactions that pay fees, setting a dangerous precedent for future protocol changes and potentially undermining Bitcoin's censorship resistance and predictability. Lopp stated that the protocol should not be altered to censor subjectively undesirable transactions, eroding its permissionless nature.
The technical changes proposed by BIP-110 include limiting most new transaction outputs to 34 bytes, restoring an 83-byte limit for OP_RETURN outputs, capping certain witness elements at 256 bytes, and temporarily restricting several Taproot features commonly used for inscriptions. Inscriptions are analogous to NFTs on other blockchains and were enabled by Bitcoin's SegWit and Taproot upgrades.
The dispute gained prominence with the launch of the Ordinals protocol in early 2023, which allows digital content to be inscribed onto individual satoshis. This led to increased demand for Bitcoin block space and higher transaction fees, which some miners view as beneficial for network security. However, developers like Luke Dashjr have labeled these inscriptions as spam.
Despite the controversy, BIP-110 has garnered minimal support from miners, with only 1% signaling readiness as of the proposal's mandatory signaling period, which begins in August. Adam Back, CEO of Blockstream, has suggested that proponents of BIP-110's vision should consider creating a separate fork if they cannot achieve consensus on the main Bitcoin network. Samson Mow, a Bitcoin advocate, emphasized the need for broad consensus for protocol changes, drawing parallels to the Blocksize Wars, and criticized the handling of related policy changes by Bitcoin Core developers.