Woofun AI reports that the Bitcoin network is currently fractured by the BIP-110 proposal, a dispute that has drawn in Michael Saylor of Strategy, Adam Back of Blockstream, mining pools Foundry and Ocean, the Bitcoin Knots node camp, and the entire Ordinals ecosystem. This is not merely a technical disagreement but a fundamental struggle over who possesses the authority to define the rules of the network, moving the conflict from simple data filtering to the core of protocol governance.

The nature of the debate shifted dramatically on July 18 when Michael Saylor published a comprehensive article titled "110 Reasons BIP-110 Is a Bad Idea", listing exactly 110 reasons why the proposal is detrimental. Saylor argues that elevating the garbage data dispute to a consensus rule change would render currently valid transactions invalid, effectively punishing users willing to pay fees. This intervention transformed BIP-110 from a routine technical proposal into a high-stakes governance question, forcing the community to confront the issue of who ultimately decides what Bitcoin should be.

Technically, BIP-110, formally known as Reduced Data Temporary Softfork, was authored by Dathon Ohm and builds upon the earlier BIP-444. The proposal outlines a plan to introduce seven new restrictions via consensus rules over a one-year period, including limiting new output scripts to 34 bytes, restoring the OP_RETURN limit to 83 bytes, and restricting data pushes exceeding 256 bytes along with certain witness items. The mechanism relies on a bit 4 miner signal with a threshold of 1109/2016, equating to 55%, with a mandatory signaling period spanning from block 961,632 to 963,647, locking in no later than block 963,648, and activating at block 965,664. Supporters contend that non-monetary data like inscriptions and Runes burden full nodes and distract developers, yet the controversy stems from pushing these policy decisions to the consensus layer where they become immutable protocol rules rather than optional forwarding strategies.

The backdrop for this conflict involves significant changes in Bitcoin Core v30, where the default value for datacarriersize was raised to 100,000, effectively relaxing the limit on OP_RETURN data carriers while allowing users to manually revert it to 83. This adjustment highlights the critical distinction between the forwarding layer, which dictates what nodes propagate, the mining layer, which determines what miners package, and the consensus layer, which validates blocks. While Bitcoin Core v30 adjusted the first two layers, BIP-110 attempts to force the policy dispute into the third layer.

In a response to Michael Saylor's 110 Reasons, early participant secsovereign argued that the development of direct submission APIs and private mining pool connections has already bypassed default node filtering, meaning the inscriptions merely exposed a balance that had long been lost. Consequently, supporters view the v30 relaxation as a formalization of this loss of control, arguing that since the strategy layer cannot hold, the boundary must be moved to the consensus layer to restore order.

Adam Back, co-founder of Blockstream and the designer of hashcash, provided a philosophical rebuttal grounded in the principles of permissionless currency. Back stated that while he personally detests garbage data and his work on hashcash was related to anti-garbage measures, the foundation of Bitcoin is that no single entity can impose value judgments on others. He emphasized that users can modify their own software but cannot force changes on others, noting that the side effect of decentralization is the absence of a police force or central authority to determine legitimate uses.

Back described the technical consensus process as a form of protective resistance, similar to the IETF, where slow scrutiny prevents unproven changes from eroding the system's foundational attributes. His opposition to BIP-110 is thus rooted in governance; he disclosed that if supporters cannot accept the status quo, they are free to fork, but Bitcoin will not join them.

Woofun AI data shows, practical limitations further complicate the viability of BIP-110, as even if activated, it may fail to block arbitrary data entirely. In March, RustBitcoin maintainer Martin Habovštiak demonstrated this by writing a 66KB TIFF image in a single transaction without utilizing OP_RETURN, Taproot, or OP_IF, proving that data can be split, encoded, or disguised to enter the chain as long as complex state transitions are allowed.

Emerging circumvention tools are also taking shape, with Leonidas, co-founder of Runestone, announcing an open-source client called DOG Mode designed to relax BIP-110's restrictions on non-financial data by altering node forwarding rules rather than consensus rules. @secsovereign noted that while BIP-110 blocks large continuous data channels, it cannot seal off distributed data stuffing, suggesting that a separate minimum output value proposal is still required.

This leaves BIP-110 in an awkward position where it bears the risk of consensus change but may only increase the cost of data embedding without ending the data war.

The activation mechanism has reignited contradictions between miners and nodes regarding the PoW constitution and sovereignty. F2Pool co-founder Wang Chun asserted that PoW is the constitution of Bitcoin and that nodes must respect miners, arguing that without miner support, a soft fork lacks legitimacy. Conversely, the Bitcoin Knots faction, represented by @MarcanoFilms, maintains that the more than 15,000 nodes currently running RDTS rules are genuine sovereign operators, not the product of witch attacks, and that the protocol layer grants equal validation rights regardless of economic size. Mining pools are also expressing divergent positions; in March, Ocean pool mined the first block supporting BIP-110 and recently stated it will upgrade its backend to independently follow multiple chains in the event of a fork.

Meanwhile, Foundry has handed decision-making power to its clients, allowing accounts to vote weighted by average hash power, with a switch to supporting BIP-110 signals occurring only if affirmative votes exceed 51% of the voting hash power.

Amidst these political maneuverings, a technical tail risk was publicly disclosed by researcher Dathon Pwn in an article titled "BlockSlop: BIP 110 Consensus Bug Public Disclosure". It is crucial to note that Dathon Pwn and proposal author Dathon Ohm are two different individuals. The disclosure revealed a consensus vulnerability in the activation client of BIP-110 on a late upgrade path, where nodes might accept a block under old rules and then continue to trust the original database upon enabling BIP-110 without revalidating history according to the new rules.

This creates a scenario where a late-upgrade node retains a historical block valid under old rules but invalid under BIP-110, while a fresh node rejects it, leading to divergent histories despite both claiming to have enabled the protocol. Dathon Pwn emphasized that this does not mean the mainnet has already split, but the triggering condition exists if blocks valid under old rules are stored before enabling the new rules, presenting a hidden divergence that is often more difficult to handle than open forks.

Corporate treasury involvement adds a new variable to this protocol politics, with Michael Saylor representing a unique force. In his article, Saylor opposed the 55% miner signal threshold, arguing it is lower than the 95% standard of BIP-9 and eliminates usual timeout and failure states, potentially increasing coordination errors and chain splits. He believes that block space fees, pruning, and Layer 2 tools can address the issues without changing consensus, warning that the governance precedent set by temporary rules could be more dangerous than the problems they aim to solve.

Strategy holds 843,775 BTC, a balance sheet that allows Saylor to influence market judgment on which chain is BTC, wielding narrative power and weight in the capital market that neither mining pools nor Core maintenance teams possess. This marks a shift where the balance sheet of a publicly traded company has stepped onto the stage of protocol politics, adding a new dimension to the debate.

The convergence of these five forces reveals that Bitcoin lacks a universally recognized arbiter. Miners hold hash power but are internally divided, while node operators advocate for equal validation and refuse to weight by economic size. A few developers hold code merge permissions and can change defaults for the entire network yet lack an accountability mechanism for node operators bearing permanent costs. Treasury holders wield narrative and capital but have no votes on-chain.

Meanwhile, the technical consensus process represented by Adam Back treats resistance to changes as a source of legitimacy. Each faction cites different bases of power and competes for the interpretation of neutrality and conservatism. BIP-110 may ultimately fail to activate, but it has already completed a governance stress test. When claims to defend the monetary boundary collide with those to maintain protocol neutrality, each side claims to be defending Bitcoin, leaving the core question unresolved: who has the authority to decide what Bitcoin is.