Bitcoin hits $65k as BIP-110 debate splits industry leaders

Bitcoin reached $65,000 on July 15, its highest in nearly a month, as BIP-110 drew opposition from Adam Back and Michael Saylor.

"BIP-110 turns a spam dispute into a consensus change that would invalidate some currently valid, fee-paying transactions," Michael Saylor, executive chairman of Strategy, said on X. "That precedent is the danger."

BIP-110, formally the Reduced Data Temporary Soft Fork, would cap OP_RETURN outputs and block arbitrary data chunks above 256 bytes for one year. The proposal targets Ordinals inscriptions and other non-financial data that supporters say bloats the blockchain. Miner support stands below 1%, with no major pool backing the change, according to the BIP-110 signaling monitor. The activation threshold requires 55% of blocks in a 2,016-block period, with a lock-in deadline at block 961,542 expected in early August.

A contentious fork remains the biggest risk. If BIP-110 activates without broad consensus, nodes running the new rules would reject blocks that do not signal support, splitting the network into competing chains. With miner support near zero and node adoption stuck in the low single digits, the proposal appears unlikely to achieve network-wide adoption.

Miner Support Stays Near Zero as Deadline Looms

The current signaling period runs from block 957,600 to 959,615, with a voluntary lock-in deadline at block 961,542 expected in early August. Nodes running BIP-110 software would then begin rejecting any block that does not signal support, with activation projected near September. In practice, a rule enforced by a few percent of nodes and almost no miners would split off a minority chain rather than change Bitcoin for everyone.

Back offered a deeper critique, describing BIP-110 as a "quest to police other people's transactions." He said Bitcoin's decentralized design means "you can't impose your views on others," calling the proposal incompatible with the network's permissionless ethos.

Price Breakout Coincides With Institutional Interest

Bitcoin's move past $65,000 comes as Charles Schwab's Jim Ferraioli described BIP-110's potential to improve Bitcoin's data field capabilities as a "bullish catalyst" for the crypto space. The $65,000 level represents a key psychological resistance, and breaking it could signal a trend reversal from the bear market trough, Ferraioli said.

Ordinals activity has fallen to fewer than 10,000 daily inscriptions over the past month, down from a peak of more than 400,000 in August 2023, Dune Analytics data shows. The decline has reduced the urgency some proponents cited for BIP-110's restrictions.

The BIP-110 debate reflects a broader question about Bitcoin's governance model — whether the network should actively adjust its rules to address specific use cases or preserve its existing approach to neutrality. The outcome will shape not only how Bitcoin processes transactions but also how future protocol changes are debated and approved.

This article is for informational purposes only and does not constitute investment advice.