A proposal intended to limit non-financial data on the Bitcoin chain has recently re-raised communities to the old question of what “bitcoin should do with it”. BIP-110 attempts to temporarily tighten the consensus rules relating to transactional data make it more difficult to implement a variety of inscriptions, but it is now difficult to move forward.
The proposal aims at cataloguing data
The background to the dispute dates back to 2021 when Taproot escalated. Upon completion of the upgrade, the developer can write pictures, text, etc. directly to the Bitcoin transaction, and then generate applications such as Ordinals and Runes.
Proponents believe that such practices take up block space for services that should have been paid and financial transactions, as well as pushing up the bandwidth and storage costs required for full node operations, and may reduce the decentrization of the network in the long run. BIP-110 therefore suggests that the relevant rules be tightened on a temporary basis to compress such data for writing and to allow time for developers to discuss long-term options.
Opponents argue that the network should not distinguish between “good use” and “bad use” as long as the transaction complies with existing rules and pays fees. In their view, the future might be further extended to other uses if bitcoin began to impose additional restrictions on a particular type of transaction.
Differences are not just about content, they're about to activate.
This debate is not just about the motto itself. The greater difference is that BIP-110 is trying to rekindle a user-driven activation path, rather than waiting for an overwhelming consensus among miners, businesses, wallets and wider ecology.
Proponents see this as a back-up to “abuse” of block space. Opponents warn, however, that the promotion of new consensus rules in the absence of broad agreement could result in different versions of bitcoin co-existing and rekindling the community ' s memory of the 2017 block.
Miners have low levels of support, and the proposal has nearly stalled.
As a result, BIP-110 failed to get critical support. Mining companies lack the incentive to reject high-cost transactions, and institutional investors are generally reluctant to become involved in new governance conflicts.
On July 11, Michael Saylor, founder of Strategy, stated that the proposal would upgrade the “garbage trade competition” into a consensus-level change and would invalidate some of the transactions that are currently valid and willing to pay fees. In his view, the real problem was that it would set a precedent.
Adam Back, co-founder of Blockstream, also continued to oppose the proposal. Reports indicate that, as of Tuesday, the proportion of miners supporting BIP-110 was just over 0.7 per cent, and that there was little prospect of wide adoption of the proposal.
Nevertheless, the wave has not ended. It has once again revealed the reality of Bitcoin governance: it is difficult for either party to decide on the future of the network alone, whether it be developers, miners, businesses or currency holders, and real change on the ground still requires broader and concerted action.