Understanding Bitcoin Improvement Proposals (BIPs)

A Bitcoin Improvement Proposal, or BIP, is a formal document that proposes a change to the Bitcoin protocol. Anyone—developer, miner, or community member—can write a BIP, describe the problem it solves, outline the technical details, and request discussion among users. The proposal does not become part of the software automatically; it must be reviewed, tested, and ultimately adopted by a majority of miners and node operators. This process is what keeps Bitcoin decentralized and resilient to arbitrary changes.

When a BIP is accepted, it usually introduces a new rule that all participants must follow. The adoption method can vary. Some BIPs require a soft fork, where the new rule is backward‑compatible, and miners signal support over many blocks. Others need a hard fork, creating a permanent divergence in the blockchain. The BIP that sparked the weekend split, BIP‑110, was intended to be a soft fork that would temporarily block non‑financial data such as Ordinals inscriptions from being embedded in ordinary transactions.

Soft forks rely on a signaling window: miners include a specific bit in the block header to indicate they support the new rule. If enough miners signal for a defined period, the network can assume consensus and begin enforcing the new rule. Without sufficient signaling, the proposal can be abandoned, or a minority can implement it anyway, leading to a chain split.

The Split That Occurred on Block 961,632

On Saturday, at block height 961,632, a group of Bitcoin nodes began running software that enforced the new BIP‑110 rule. From that point onward, any block that did not carry the required signaling bit was rejected by those nodes. While the main Bitcoin network continued to accept blocks regardless of the signal, the BIP‑110‑enabled nodes created a separate blockchain.

The first block mined on the breakaway chain was produced by a miner from the Ocean pool. The new chain inherited the existing difficulty target, meaning miners had to solve the same mathematical puzzle as the main chain. However, the BIP‑110 fork quickly fell behind because only a small fraction of the total hash power was committed to it. In the first eight hours, only two blocks were found, leaving the minority chain dozens of blocks behind the main network.

This lag illustrates a fundamental principle of Bitcoin: the security and stability of a blockchain are directly tied to the amount of computational power that supports it. When a fork cannot attract a substantial share of miners, it struggles to keep pace, and its transaction history quickly becomes irrelevant to most users and services.

Why the BIP‑110 Chain Stalled: Mining Difficulty and Hash Power

Bitcoin adjusts its mining difficulty roughly every 2,016 blocks, aiming to keep the average block time near ten minutes. This adjustment is crucial because it compensates for changes in the total hash rate of the network. When many miners join, the difficulty rises; when many leave, it falls.

The BIP‑110 fork did not have its own difficulty adjustment because it started at the same height as the main chain. It therefore kept the difficulty target that was active at block 961,632. At the same time, the fork commanded only about 2.53% of recent blocks to signal support, which is far below the typical 55% activation threshold needed for a soft fork to succeed without splitting.

With only a tiny fraction of hash power, the two blocks found by the minority chain took much longer than the usual ten‑minute interval. As a result, the chain fell far behind. The next difficulty adjustment for the BIP‑110 chain will not occur until roughly 2,016 of its own blocks have been produced, which, at the current pace, would take about 350 days. In contrast, the main Bitcoin network will adjust its difficulty every two weeks. This disparity makes it extremely unlikely that the BIP‑110 chain can ever catch up or become viable.

The situation also highlights a concept known as "nothing at stake." In a soft fork that fails to achieve consensus, miners may still be willing to continue mining on both chains because there is no penalty for doing so. However, the economic incentives quickly favor the chain with the majority of hash power, leaving the minority fork with negligible security and an uncertain future.

Signaling and Activation Mechanics

Miners signal support for a soft fork by setting a specific bit in the block header. This bit is part of the block version field. When a block is mined, the bit value is transmitted to other miners and nodes, who monitor the frequency of blocks that contain the signal. If the percentage of blocks with the bit set exceeds the activation threshold—often 95% for a soft fork—nodes can safely assume that the majority of miners intend to adopt the change and begin enforcing the new rule.

Because the BIP‑110 proposal required a 55% activation threshold (a lower threshold chosen to allow for a minority activation path), the network could have theoretically accepted the change if a sufficient number of miners signaled support over the designated period. The fact that only about 2.53% of recent blocks carried the signal indicates that the vast majority of miners and mining pools deliberately chose not to adopt the rule.

Ordinals and Non‑Financial Data: The Spark of Controversy

Ordinals are a method of embedding arbitrary data—such as images, text, or other digital artifacts—directly into Bitcoin’s unspent transaction outputs (UTXOs). The process assigns a serial number to a satoshi (the smallest unit of a bitcoin) and links that number to the data, creating what is commonly called an “Ordinal inscription.” Proponents argue that this functionality turns Bitcoin into a platform for digital art and collectibles, expanding its utility beyond pure currency.

When Ordinals first appeared, they generated a noticeable amount of additional data in every block. This data occupies space in the block, which is a limited resource. Because every block can contain only a certain amount of transaction data, the presence of large Ordinals inscriptions can increase competition for block space, driving up transaction fees for users who simply want to send bitcoins to one another.

Supporters of BIP‑110 contended that the ability to embed arbitrary data was a side effect of Bitcoin’s scripting capabilities that had never been intended for mass use. They argued that allowing such data to be included in standard transactions could turn the network into a “spam” medium, increasing the risk of denial‑of‑service attacks and inflating fees for ordinary users. By temporarily prohibiting the inclusion of non‑financial data in regular transactions, BIP‑110 sought to protect the network’s primary function as a payments system.

Critics, however, viewed the proposal as a form of censorship. They pointed out that any rule that prevents users from voluntarily paying for block space and using it as they see fit undermines the principle of permissionless innovation. They also noted that miners and node operators would become de facto gatekeepers, deciding what data is “financial” and what is “spam.” This delegation of authority could erode Bitcoin’s censorship‑resistant ethos.

The Legal and Philosophical Debate Over Censorship

The core disagreement surrounding BIP‑110 touches on two broader philosophical questions. First, should Bitcoin’s block space be considered a public resource that should be optimized for low‑cost, high‑throughput payments? Second, does the ability to embed data create legal liabilities for node operators that could jeopardize the network’s operation?

Michael Saylor, the outspoken Bitcoin evangelist, argued that allowing non‑financial data to be included in transactions sets a dangerous precedent. He warned that once a “spam” issue is addressed through a consensus change, future disputes could be resolved by similar top‑down measures, weakening Bitcoin’s resistance to censorship. In his view, the network’s design already provides a robust market mechanism: users who want to include data should pay for the block space, and miners are free to accept or reject those transactions based on their own economic interests.

Jameson Lopp, co‑founder of Casa, took a harsher stance. He accused BIP‑110 supporters of being swayed by “delusional propaganda” and even of harassing long‑time Bitcoin contributors. Lopp’s comments reflect a broader sentiment within the community that the proposal was not only technically unnecessary but also culturally hostile to the open‑source spirit that has driven Bitcoin’s growth.

The debate also touches on practical concerns. Some legal scholars have raised the possibility that hosting certain types of data could expose node operators to regulatory scrutiny, especially if that data is considered illegal in some jurisdictions. By banning such data, BIP‑110 attempted to reduce the legal risk for the broader ecosystem. However, opponents argue that the risk is already manageable through voluntary filtering and that imposing a blanket ban is overly restrictive.

Technical Risks: Replay Attacks and Chain‑Specific Transactions

When a blockchain splits, both the original and the new chain recognize the same transactions, but they are valid on different ledgers. This similarity creates a vulnerability known as a replay attack. An attacker can take a transaction that was successful on the BIP‑110 chain and replay it on the main Bitcoin chain, effectively causing the same transfer of funds to occur on both networks.

Replay attacks can be mitigated by adding replay‑protection logic to each chain. This often involves modifying transaction formats or including chain‑specific markers that make a transaction valid only on one side. The BIP‑110 fork did not implement such protection, leaving its users exposed. If someone held bitcoins on the minority chain and attempted to move them on the main network, they might unintentionally send their main‑chain bitcoins as well.

For users who chose to keep their coins on the BIP‑110 side, the lack of replay protection meant that any transaction broadcast to the main chain could be replayed, potentially resulting in a loss of funds. This risk is one reason why many wallet operators advised users not to move assets onto the fork and why the fork ultimately failed to attract significant liquidity.

Post‑Fork Assessment: Numbers and Community Sentiment

By early Sunday morning, the BIP‑110 branch had mined only two blocks and was already more than 80 blocks behind the main Bitcoin network. The signaling window, which was intended to last until block 963,647, never reached that height. In effect, the minority chain was stuck with a small hash rate, a stagnant difficulty, and no meaningful transaction activity.

Michael Saylor posted on X, emphasizing that the network responded “exactly as designed.” He highlighted that about 99.85% of the hash power remained with Bitcoin, demonstrating the robustness of the consensus mechanism. Jameson Lopp, meanwhile, took a more punitive stance, stating he would not welcome back BIP‑110 supporters. His comment underscored a growing tension between those who view protocol changes as a matter of technical improvement and those who see them as threats to Bitcoin’s foundational principles.

Community sentiment, as reflected in social media and developer forums, overwhelmingly favored the main Bitcoin chain. The swift collapse of the BIP‑110 fork illustrated the difficulty of forcing a change without broad miner support and reinforced the importance of achieving consensus before attempting to modify the protocol.

Broader Lessons for Bitcoin Governance

The BIP‑110 episode serves as a case study in how Bitcoin’s governance functions. Governance is not a top‑down process but an emergent property of economic incentives, technical merit, and social coordination. A proposal must convince miners, developers, and users that it provides a net benefit. When a proposal fails to achieve the necessary signaling, the network remains unchanged, and minority groups can optionally implement their own version—provided they are willing to accept the consequences of isolation.

Moreover, the incident highlighted the role of market mechanisms in determining which features survive. The presence of Ordinals created a new market for digital collectibles, but it also increased transaction costs for ordinary payments. The tension between these two use cases remains unresolved, and future BIPs may need to address this balance more directly.

Finally, the fork illustrated the importance of replay protection. As the Bitcoin ecosystem evolves, any future split must consider how to protect users from accidental double spends, especially as the value of coins on each chain can differ dramatically.

Conclusion: A Brief but Instructive Split

Although the BIP‑110 fork lasted only a few hours and produced just two blocks, it offered a vivid demonstration of several core Bitcoin concepts. It showed how a soft‑fork proposal can be implemented by a minority group, how mining difficulty and hash power dictate a chain’s viability, and how the community reacts to perceived censorship. The swift collapse of the breakaway chain reaffirmed that the majority of miners, developers, and users remain committed to the original Bitcoin protocol.

For anyone studying Bitcoin, the BIP‑110 episode is a reminder that technical changes are never purely technical; they are embedded in a complex web of economic incentives, ideological beliefs, and social coordination. Understanding these dynamics is essential for anticipating how Bitcoin will evolve as it continues to scale and adapt to new use cases.