A proposal to restrict non-financial data on the Bitcoin blockchain failed to activate in early August [1].
The failure of BIP-110 highlights a fundamental tension in Bitcoin governance regarding whether the network should differentiate between various types of data usage. By attempting to limit large OP_RETURN payloads—often used for non-financial data—the proposal sought to prevent blockchain spam and prioritize financial transactions [2].
Support from the mining community remained negligible throughout the process. Reports on the level of adoption varied slightly, with some sources stating miner support was below one percent [1] and others reporting it was zero [3]. Because Bitcoin requires broad consensus from those securing the network to implement such changes, the lack of miner backing effectively killed the initiative.
The debate over BIP-110 sparked a wider conflict over who holds the authority to decide the future of the network [4]. Proponents argued that restricting "bad" uses of the blockchain would ensure long-term stability. Opponents, however, viewed the restriction as an overreach that threatened the permissionless nature of the system.
Michael Saylor expressed strong opposition to the measure. "BIP-110 is dangerous," Saylor said [5].
The episode is being viewed by some as an example of free-market capitalism within a decentralized system. In this model, a technical proposal only succeeds if it provides value that the majority of independent actors, in this case, the miners, are willing to support [6]. Without that economic or technical incentive, the proposal could not move forward despite the efforts of its developers.
“"BIP-110 is dangerous."”
The collapse of BIP-110 reinforces the primacy of miners in the Bitcoin governance hierarchy. It demonstrates that technical improvements or restrictions cannot be imposed top-down by developers if they conflict with the incentives or philosophies of the parties providing the computational power to secure the network.
