- Critics called BIP-110 a failed anti-spam filter for Bitcoin while miner participation in the soft-forked minority chain remains relatively low.
The Bitcoin (BTC) community is split, with one group pushing for Bitcoin Improvement Proposal (BIP)-110. However, the latest developments proved its relevance in the grand scheme of things.
This article explores the turnaround of the proposal. It also digs into whether it will ever serve its purpose.
What BIP-110 Is All About
Proponents led by the pseudonymous Dathon Ohm defined BIP-110 as a measure to temporarily limit the size of the data field on the Bitcoin chain at the consensus level. It aims to “correct distorted incentives caused by standardizing support for arbitrary data.” Additionally, it refocuses priorities on improving Bitcoin as a medium of exchange.
BIP-110’s deployment only runs for a year, with a stipulation to refine or extend it based on community feedback. Supporters view it as a solution to reducing data bloat on Bitcoin, which they believe adds a burden on node operators and is a significant waste of resources.
Overall, BIP-110 preserves Bitcoin’s status as money. It aligns with pseudonymous cryptographer and cypherpunk Satoshi Nakamoto’s “peer-to-peer electronic cash system” design, as detailed in the Bitcoin Whitepaper he published in October 2008.
Proponents assured that BIP-110’s deployment won’t affect Bitcoin’s prevailing monetary use cases, which will remain fully functional. It simply prevents the chain from devolving into a data storage.
BIP-110 would have restricted non-financial data on Bitcoin for a year, including the creation of ordinal inscriptions.
Satoshi’s Stance on Arbitrary Messages in Bitcoin
An old thread involving Bitcoin’s creator recently resurfaced as debate over BIP-110 heated up. Satoshi himself clarified that the chain’s ECDSA (Elliptic Curve Digital Signature Algorithm) is not for encrypting messages. Its only purpose is to sign signatures.
Satoshi argued that it’s unwise to leave permanently recorded plaintext messages for everyone to see. He called it an “accident waiting to happen.”
Instead of an embedded messaging system in Bitcoin, Satoshi recommended a separate system parallel with the chain. He advised that users could sign messages with their Bitcoin address keys as proof of their sources.
Supporters have frequently used the thread to justify BIP-110.
Key Criticisms on BIP-110
BIP-110 was immediately met with widespread opposition, particularly from Strategy Executive Chairman and Blockstream CEO Adam Back. Both pushed back on the proposal, arguing that it undermines Bitcoin’s core purpose.
Saylor, chair of the world’s largest corporate treasury company, emphasized that BIP-110 curbs the economic freedom BTC safeguards. It would restrict it to the same monetary purity offered by fiat currencies.
Back, who is among the recurring suspects at every conversation regarding Satoshi’s real identity, considered BIP-110 “a downgrade” rather than a cleanup. He pointed out that users can still bypass the proposal’s restrictions, but the damage it could bring to innovation can’t be reversed.
Back stressed that Bitcoin’s strength is its credible commitment to neutral, predictable rules. He dismissed BIP-110 as “a spam filter that doesn’t even filter spam.
BIP-110 Goes Live But Has Problems Catching Up
Bitcoin reached block height 961,632 on Saturday. It signaled the scheduled execution of BIP-110.
However, only 2.53% of blocks supported the proposal, a long shot compared to the 55% miner-signaling threshold required to make Bitcoin adopt the new rules. As a result, the event triggered a user-activated soft fork (UASF). The minority chain began aggressively rejecting blocks that didn’t support its controversial anti-spam mechanisms.
AntPool, a leading Bitcoin mining platform, captured the first block during BIP-110 implementation. Most nodes accepted the block, but participants in the minority chain rejected it.
Instead, the minority chain accepted Ocean’s Roughnecks mining pool. It led to an alternative block in the UASF, with the same pool capturing another block in the same timeframe. But then again, its victory was short-lived.
Kucoin claimed that the adoption rate of nodes supporting the BIP-110 is virtually low, with estimates ranging from 2% to 8%. Meanwhile, the BIP-110 monitor indicates a low signaling level for the new soft-forked protocol, suggesting a massive miner boycott occurring amid the proposal.
Moreover, by Sunday morning, the BIP-110 minority chain lagged by around 48 blocks as the dominant chain produced more valid blocks. The difficulty retarget at block 961,632 made matters more challenging for the proponents of the schism, as Bitcoin’s difficulty target does not immediately scale downward during a chain split. It left the minority chain, which was backed by a tiny fraction of the global hashrate, struggling more to solve blocks designed for the entire global network.
BIP-110’s Relevance
There are several insights that the Bitcoin community can draw from the ongoing BIP-110 issue. First, it serves as a stress test for modern UASFs, which, unlike the overwhelmingly supported 2017 SegWit (Segregated Witness) activation, has forced itself into the network. What resulted is a minority chain due to a lack of economic alignment with a majority of network participants.
Second, the situation shows that while individual node operators have absolute sovereignty to run custom software rules, they would still need sufficient mining hash power or economic backing. It only leads to self-isolation on a stalled branch.
Third, Bitcoin’s rejection of the forced consensus-level data cap is a testament to its role as an open, permissionless settlement layer. As long as the transaction adheres to its cryptographic rules and is subject to prevailing fees, the consensus mechanism remains indifferent to the payload’s subjective contents.
BIP-110’s Irrelevance
On the other hand, the failure of BIP-110 highlights its irrelevance in Bitcoin’s underlying game theory. First off, as Back stated, attempting to filter arbitrary data at the consensus level is futile. As long as users are willing to pay block space fees, data can be easily encoded into the chain’s standard monetary structure, such as public keys, multisig scripts, or taproot leaves.
Next, ordinal inscriptions contribute substantial revenue for the Bitcoin mining industry. Hence, they are not expected to support a measure that would limit the chain’s revenue-generating potential. As Saylor also said, it censors non-financial transactions, which runs contrary to the mantra of the Bitcoin community.
Moreover, the BIP-110’s rapid failure underscores its practical irrelevance to the canonical network. With its branch stalling almost immediately under the weight of the difficulty retarget, standard mainnet transactions, fee markets, and block production times continued completely uninterrupted.
Furthermore, the event did not yield any extraordinary movement in BTC’s price, thus reinforcing that it does not affect market fundamentals.
