Bitcoin has always evolved through open discussion.
Every significant upgrade—from SegWit to Taproot—has sparked debate within the community before becoming part of the network.
Now, another proposal is drawing attention: BIP-110.
Supporters argue that it helps preserve Bitcoin’s decentralization by keeping the blockchain affordable to verify. Critics believe it could set a dangerous precedent by limiting how people use the network.
So, what exactly is BIP-110, and should Bitcoin users be concerned?
Let’s break it down.
What Is a Bitcoin Improvement Proposal (BIP)?
Before discussing BIP-110, it’s important to understand what a Bitcoin Improvement Proposal (BIP) is.
A BIP is a formal design document that proposes a change to Bitcoin’s protocol or its processes. BIPs are numbered sequentially, which is why this one is BIP-110.
Not every BIP becomes part of Bitcoin. In fact, many proposals are discussed extensively before being rejected or abandoned.
This open process allows developers, miners, node operators, businesses, and the broader community to evaluate changes before they are adopted.
What Is BIP-110, Technically?
BIP-110 — formally titled the “Reduced Data Temporary Softfork” (RDTS), and known earlier under the draft name BIP-444 — is a proposed one-year, temporary soft fork that restricts how much non-financial data can be embedded in Bitcoin transactions.
It targets:
- Ordinals inscriptions
- BRC-20 tokens
- Runes
- Oversized OP_RETURN payloads and other arbitrary metadata
- Other non-financial metadata
If activated, it introduces a small set of consensus-level rules, including:
- Most new transaction outputs capped at 34 bytes
- OP_RETURN outputs capped at 83 bytes — restoring an older policy limit
- Data pushes and witness elements capped at 256 bytes
- Temporary restrictions on certain Taproot script-path structures (deep Tapleaves) commonly used for large inscriptions
Two details matter for anyone holding Bitcoin today:
- UTXOs created before activation are permanently exempt. Existing funds and past transactions are unaffected regardless of whether BIP-110 activates.
- The rules expire on their own, roughly one year after activation — this isn’t presented as a permanent change to Bitcoin’s protocol.
The proposal would temporarily tighten Bitcoin’s transaction validation rules, reducing the ability to publish these types of data directly on-chain.
The primary goal is straightforward:
Keep Bitcoin affordable for anyone to verify.
How Would BIP-110 Actually Activate?
This is a soft fork, so it doesn’t need every node or miner to upgrade — but it does need signaling support. Miners signal support via a version bit in the blocks they mine. If enough blocks in a given difficulty period signal support, the rule change locks in and activates. One of the more contentious details in this proposal is that the required signaling threshold was lowered from the traditional 95% to 55% — a change critics argue makes it easier to force through a consensus rule that doesn’t have broad support.
As of mid-2026, miner signaling has remained low (reported at under 1% at points), while a mandatory signaling window falls in early August 2026. Bitcoin Core — the most widely run node implementation — has not endorsed the proposal; the reference implementation supporting it is Bitcoin Knots.
This matters for the framing of the debate: BIP-110 isn’t a purely hypothetical idea being floated for discussion. It’s an active proposal moving through a real activation process with a concrete deadline, even though its ultimate adoption is still uncertain.
Why Was BIP-110 Proposed?
The discussion isn’t really about JPEGs or inscriptions.
It’s about something much more fundamental:
Who should be able to run a Bitcoin node?
Every full node stores the blockchain and independently verifies every block and transaction.
As Bitcoin’s blockchain grows larger, operating a node requires:
- More storage
- More bandwidth
- More processing power
Supporters of BIP-110 argue that if the blockchain grows too quickly because of non-financial data, running a node becomes increasingly expensive over time — and that this could shrink the number of independently operated nodes, making the network less decentralized.
Their reasoning is summarized in Bitcoin’s long-standing principle: don’t trust, verify. The easier and cheaper it is to run a node, the stronger that principle holds in practice. If verification becomes too costly, fewer people do it, and more users end up trusting someone else’s node instead of their own.
The easier it is to run a node, the stronger Bitcoin’s decentralization becomes.
Why Are Some People Against BIP-110?
While many in the community agree that blockchain growth deserves attention, critics argue BIP-110 solves the problem the wrong way — and their objection is philosophical as much as technical.
Bitcoin has traditionally operated on a simple rule: if a transaction follows consensus rules and pays the required fee, it should be accepted. Critics — Adam Back and Michael Saylor among the most vocal — worry that filtering transactions based on their content rather than their validity moves Bitcoin away from that neutrality. In their view, the network shouldn’t decide whether someone is transferring money, minting an NFT, or storing data; if it’s a valid, fee-paying transaction, it should be treated the same as any other.
There’s also a more technical objection circulating in the community: some argue that nodes enforcing BIP-110 might not fully revalidate old blocks under the new rules, which could create a risk of divergence in how different nodes interpret blockchain history — a concern critics have raised as a possible consensus vulnerability rather than a purely philosophical one.
Separately, wallet developers have flagged a practical migration concern: some wallets that allow complex Miniscript constructions may build Tapleaf structures that would become temporarily unspendable under the new depth restrictions. Those wallets need to update before activation, though again, this only affects new transaction structures — existing funds are unaffected.
The Debate: Decentralization vs. Neutrality
The current discussion can be summarized as two competing priorities.
Supporters of BIP-110 believe
- Running a node should remain affordable.
- Blockchain growth should be carefully managed.
- Bitcoin’s primary purpose is sound, verifiable money.
- Limiting arbitrary data helps preserve long-term decentralization.
Critics argue
- Bitcoin must remain permissionless.
- Valid, fee-paying transactions should never be filtered based on content.
- Market-driven fees already regulate block space usage without new consensus rules.
- Lowering the activation threshold and changing consensus rules over a contested issue risks unnecessary division.
Both sides say they’re protecting Bitcoin — they just prioritize different things: cheap verification versus unconditional neutrality.
Could This Lead to a Bitcoin Fork?
Whenever the term “soft fork” comes up, people reasonably wonder whether Bitcoin could split into two separate chains — as it did during the Blocksize Wars, which led to Bitcoin Cash in 2017 and Bitcoin SV in 2018.
BIP-110 hasn’t reached that point, but the friction is real. Bitcoin Core hasn’t endorsed it, miner signaling has been weak, and prominent voices on both sides disagree sharply about the technical risks and the precedent it sets. If it doesn’t gather sufficient signaling support by its deadline, the proposal simply won’t activate — that’s how soft forks work. But the debate itself is a reminder that even a temporary, expiring rule change can reopen fundamental disagreements about how Bitcoin’s governance should work.
Does BIP-110 Affect Bitcoin Holders?
For most Bitcoin users, nothing has changed yet.
- Your Bitcoin remains safe, regardless of the outcome
- Transactions continue to work normally
- Existing UTXOs are permanently exempt from the new rules even if BIP-110 activates
- No action is required unless you use wallet software that relies on advanced, unusual script structures — in which case, check for updates from your wallet provider ahead of the August 2026 deadline
Like every BIP, this one only takes effect with sufficient miner signaling — and as of now, that support remains uncertain.
What Does This Mean for Klever Wallet Users?
Whichever way this activation process goes, Klever Wallet users don’t need to take any action on their existing BTC holdings — funds created before any activation date are unaffected under the proposal’s own rules.
More broadly, this is a good example of why self-custody matters: whether Bitcoin’s rules stay the same or evolve, holding your own keys means you’re not depending on someone else’s decision about which transactions are “acceptable.” Klever Wallet lets you manage your BTC securely while keeping full ownership of your private keys, independent of how this debate resolves.
Why This Debate Matters
Bitcoin isn’t governed by a single company or organization. Every meaningful change requires open discussion, technical review, and broad community buy-in — that’s one of its core strengths, even when the process is messy.
BIP-110 is the latest example of the ecosystem weighing trade-offs between scalability, decentralization, neutrality, and long-term sustainability. Whether or not it activates by its August 2026 deadline, the conversation itself is a live test of how Bitcoin resolves disagreements without a central authority to decide for it.
Final Thoughts
BIP-110 isn’t just about limiting data stored on Bitcoin.
It’s about balancing two fundamental ideas:
- Keeping Bitcoin decentralized by making it affordable to verify
- Preserving Bitcoin’s neutrality by allowing all valid transactions
As the ecosystem grows, discussions like these will continue shaping the future of the world’s largest cryptocurrency. For everyday users, the most important takeaway is simple: stay informed, avoid reacting to headlines, and maintain control of your assets through secure self-custody. With Klever Wallet, your Bitcoin remains yours — no matter how the conversation evolves.
