Jul 14, 2026, 11:01 a.m.
3 min read
Summary
- BIP-110 aimed to temporarily restrict certain types of transaction data on the Bitcoin blockchain.
- The proposal sparked debate over whether Bitcoin should distinguish between "good" and "bad" uses.
- The proposal now appears unlikely to be activated having gained little support from miners or the wider industry.
Bitcoin has experienced exchange collapses, government crackdowns and community debates over how the network should scale. However, one proposal aimed at restricting certain types of data stored on the blockchain has become one of its most contentious governance debates in several years.
The Bitcoin Improvement Proposal (BIP)-110 sought to temporarily tighten the network's consensus rules in a way that would make many types of non-financial tractions far more difficult.
Its supporters think of the proposal as an attempt to restore Bitcoin's original purpose as peer-to-peer digital cash. But critics say it represents an attempt to restrict or censor certain uses of Bitcoin.
The proposal now appears to have little chance of activation after failing to gain meaningful industry backing and numerous high-profile Bitcoin developers and investors voicing their opposition to it. Nevertheless, the surrounding debate is sure to continue and provides a fascinating insight into how Bitcoin governance actually works.
Bitcoin's purpose
The BIP-110 controversy begins with a question that has divided Bitcoins for many years: what is Bitcoin's blockspace - or the capacity to handle data in each block - actually for?
The activation of the Taproot upgrade in 2021 allowed developers to embed images, text and other data directly into Bitcoin transactions. These "incriptions" gave rise to Ordinals which enabled Bitcoin's own version of non-fungible tokens (NFTs) an subsequently Runes, which could be described as a protocol for minting memecoins.
Their supporters argue that these applications used Bitcoin exactly as designed, paying a price for blockspace and using that space as they see fit. It was not, they said, Bitcoin's job to decide what could and could not be stored on its network.
Others disagreed. Certain long-time Bitcoin users such as veteran developer Luke Dashjr argued that these applications were exploiting technical loopholes rather than harnessing intended functionality. The contention is that large amounts of non-financial data unnecessarily expands the blockchain, increasing bandwidth requirements needed to operate a full node and making decentralization harder to preserve due to favouring big mining companies.
BIP-110 wasn't designed to outright ban non-financial data, but to temporarily tighten the consensus rules on transaction data, making inscription methods impossible.
The intended timescale of around a year would give developers time to consider longer-term solutions while preserving blockspace in the interim.
These objectives became somewhat muddied in the ensuing debate as opponents argued against subjective judgements about how blockspace should be used.
Bitcoin's consensus rules have historically treated valid transactions equally regardless of purpose. BIP-110 prompted concerns that rules aimed at discouraging one category of transaction risked opening the door to future restrictions on others.
BIP-110 rejected
The means by which the proposal sought approval was equally contentious. Bitcoin upgrades typically only proceed after overwhelming support has emerged across miners, businesses, wallet providers and the wider ecosystem. BIP-110, instead, revived discussion around a user-led activation approach, with upgraded nodes enforcing the new rules if predefined conditions were met.
Supporters viewed that as a necessary safeguard if miners refused to act against what they considered abuse of block space. Opponents warned that attempting to introduce new consensus rules without broad agreement risked creating incompatible versions of Bitcoin, a scenario that many veterans still associate with the divisive block-size wars of 2017.
This was where BIP-110 fell short in winning support. Mining companies had little inventive to reject transactions that paid competitive fees, while institutional investors had no appetite for governance battles.
Michael Saylor, founder of Strategy, the largest corporate holder of bitcoin BTC$62,660.96, said BIP-110 "turns a spam dispute into a consensus change that would invalidate some currently valid, fee-paying transactions."
"That precedent is the danger," he wrote on X on July 11. "We shoul save our energy for threats that really matter."
Veteran developer and Blockstream co-founder Adam Back has also been a consistent BIP-110 critic.
The proposal has ultimately failed to attract meaningful support from mining pools and appears to have reached a dead end in attracting broader support from the Bitcoin community, with just over 0.7% of miners in support of Tuesday.
The episode, however, may come to be viewed as a flashpoint in the broader, ongoing debate about what is Bitcoin is for.
Whatever the answer to that question, BIP-110 demonstrates that lasting changes require broad alignment across the people who write the software, secure the network, build businesses on top of it and ultimately choose which version of Bitcoin carries value.
AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.
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