Bitcoin miners reject BIP-110 data restrictions
A proposal to restrict non-financial data on the Bitcoin network has failed after securing minimal miner backing, highlighting the high threshold for altering blockchain consensus rules even as broader market trading activity rebounds.
Bitcoin's BIP-110 proposal has effectively been abandoned after capturing just over 0.7% of mining support, ending a contentious debate over network censorship. The initiative sought to temporarily tighten consensus rules to block the inscription of non-financial data, such as images and text, onto the blockchain.
The failure demonstrates the high threshold required to implement changes on Bitcoin, demanding alignment among developers, miners, and businesses. For corporate treasurers and institutional investors, the resolution removes a near-term risk of a network chain split, a scenario veterans still associate with the divisive block-size wars of 2017.
The debate stemmed from the 2021 Taproot upgrade, which enabled users to embed data directly into transactions. This functionality spawned Bitcoin-based non-fungible tokens known as Ordinals, and subsequently Runes, a protocol for minting memecoins.
Veteran developer Luke Dashjr and other proponents argued these applications exploited technical loopholes, unnecessarily expanded the blockchain, and raised the bandwidth costs required to run a full node. They warned this dynamic ultimately favored large mining operations and threatened network decentralization.
Opponents countered that Bitcoin's consensus rules must treat all valid transactions equally, regardless of their purpose. Critics argued that distinguishing between acceptable and unacceptable uses of blockspace would set a dangerous precedent for future censorship.
The proposal further alienated the industry by suggesting a user-led activation method, bypassing the traditional need for overwhelming ecosystem support. Veteran developer and Blockstream co-founder Adam Back was a consistent critic of this approach.
Michael Saylor, founder of Strategy, the largest corporate holder of bitcoin, voiced his opposition on X on July 11. "That precedent is the danger," he wrote. "We shoul save our energy for threats that really matter."
Mining companies ultimately had little financial incentive to restrict transactions that paid competitive fees. Institutional investors similarly showed no appetite for a protracted governance battle over blockspace allocation.
The episode signals that Bitcoin's base layer is likely to remain resistant to targeted changes. This reality pushes application innovation to secondary layers rather than the core protocol.
Market activity rebounds
While protocol governance remains rigid, secondary market activity showed signs of recovery in June. Centralized exchange trading volumes rose for the first time in five months.
Spot trading climbed 15.3% to reach $1.11 trillion. Furthermore, perpetual volumes for real-world assets surged to a record $311 billion.
