Michael Saylor posted seven words on X: "Bitcoin is a permissionless network. Keep it that way." That was enough. Within hours, the BIP-110 proposal—a soft fork aiming to limit block data and suppress non-monetary transactions like Ordinals—was effectively killed. The numbers tell the story: miner signaling hovered near 1%. Not 95%. Not 55%. One percent. The proposal never had a chance, but the scars from the debate will linger.
Context: What BIP-110 Actually Proposed BIP-110, the "Reduced Data Temporary Soft Fork," was drafted by a pseudonymous developer in late 2023. Its goal: temporarily reduce the maximum block data size from 4 million weight units to roughly 2 million, targeting inscription-heavy transactions that had congested blocks and spiked fees. The mechanism was crude—a static limit that would be lifted after one year—but the activation threshold was the real bombshell: only 55% miner approval, down from Bitcoin’s historic 95% standard. Proponents argued that Ordinals and Runes were "spam" degrading network utility. Critics saw a slippery slope toward content censorship.
Core: Systematic Teardown of BIP-110 Let’s be precise. BIP-110 is not a technical innovation; it’s a restriction disguised as an upgrade. It does not improve scalability, security, or privacy. It imposes selective limits based on transaction purpose—a concept antithetical to Bitcoin’s permissionless ethos. The proposed threshold shift from 95% to 55% would have created a minority soft fork risk: a group holding only 55% of hashrate could enforce new rules on the remaining 45%, potentially splitting the chain. Bitcoin Core developers Adam Back and Jameson Lopp publicly called the proposal "reckless." Saylor’s warning about creating "a precedent that could later be used against privacy tools or enterprise applications" was not theoretical—it was a direct reference to censorship resistance.
Analyzing the economic incentives: miners earn transaction fees + block subsidy. BIP-110 would reduce fee revenue by eliminating high-fee inscription transactions. In 2024, Ordinals-related fees accounted for up to 20% of total block rewards during congestion. Cutting that off weakens miner incentives long-term. The proposal’s supporters—primarily a small group of developers and Bitcoin maximalists who view Ordinals as spam—overlooked the obvious: forcing miners to accept lower fees only pushes them toward centralized mining pools or reliance on subsidy, neither of which strengthens the network.
Contrarian: What the Bulls Got Right Let me be fair. The anti-BIP-110 camp, led by Saylor, Back, and Lopp, correctly identified the existential risk: once you allow consensus rules to judge transaction content, Bitcoin ceases to be neutral. The proposal’s defeat reaffirms that principle. However, the victory is hollow. The underlying problem—block space contention from non-monetary protocols—remains unsolved. Ordinals continue to bloat blocks. Fees remain volatile. The network has not adapted; it has simply refused to change. Silence is the only honest ledger. The bulls claim Bitcoin’s "immutability" is its greatest strength. But immutability also means inability to fix legitimate issues. Code does not lie; intent does. BIP-110’s intent was to preserve Bitcoin’s original vision. Its execution was flawed, but the intent was not malicious.
Takeaway: Accountability and The Path Forward BIP-110 is dead. But the question it raised—Can Bitcoin evolve to manage transaction types without sacrificing permissionlessness?—will resurface. The Bitcoin L2 ecosystem (Lightning, RGB, Stacks) now carries the burden of scaling without changing the base layer. If those solutions fail to absorb demand, the fee war will intensify, and another, more sophisticated proposal will emerge. The community has spoken: verify the hash, trust no one. But trust in a protocol that cannot adapt to its own success is a fragile foundation. The next battle will not be about thresholds. It will be about whether Bitcoin can innovate at Layer 2 fast enough to keep its base layer pristine.
