I do not chase the candle; I study the gravity. The BIP-110 saga is not about blocksize or ordinals—it is about the invisible hand of institutional capital shaping Bitcoin’s consensus ossification. In a bull market where euphoria masks technical flaws, this proposal died before it ever lived, yet its ghost will haunt Bitcoin’s governance debate for years.
Context: A Proposal to Clean the Block BIP-110, introduced as a soft fork, aimed to temporarily reduce block data limits by restricting the weight of transaction data. Its explicit target: non-monetary use cases like Ordinals inscriptions and BRC-20 tokens, which had swollen block sizes and transaction fees. The mechanism was blunt—limit the data payload to suppress “spam” transactions. To activate, it required only 55% miner signaling, a sharp deviation from Bitcoin’s long-standing 95% threshold. The rationale was efficiency, but the implication was control.
Miners rejected it almost universally—support hovered around 1%. Strategy’s Michael Saylor, holding over 84,000 BTC, publicly warned of an “unconstitutional” chain split. Core developers like Adam Back and Jameson Lopp dismissed the proposal as reckless, arguing it opened the door to censorship. The proposal had been discussed for over a year, but never crossed the line from ideation to threat.
Core Insight: The Tripartite Veto This event reveals Bitcoin’s governance as a tripartite veto system: miners, core developers, and large holders. Saylor’s opposition alone would not sink a proposal, but his capital combined with Back’s technical authority created an informal veto that no BIP can survive. Liquidity is a mirror, not a foundation—the capital behind Saylor reflects the preference of the largest leveraged holder for stability above all else.
From a macro perspective, this is not a failure of democracy but a feature of elite consensus. The 95% miner threshold already ensures that only uncontroversial upgrades pass. Lowering it to 55% would have allowed a minority coalition to force change, breaking the conservative tradition that protects Bitcoin’s settlement integrity. The community’s instinct to block such a move is rational: once you allow majority-rules on consensus, you invite chain splits and regulatory capture.
Certainty is the enemy of the ledger. BIP-110’s death confirms that Bitcoin’s protocol will remain frozen for the foreseeable future. The only updates that will survive are those that require near-unanimous consent—essentially, only bug fixes or minor efficiency improvements. This ossification has consequences: the network cannot adapt to new usage patterns, leaving congestion and high fees as permanent features.
Contrarian Angle: The Hidden Cost of Immunity The common narrative celebrates this as a victory for immutability and permissionless innovation. I disagree. The contrarian truth is that by refusing to limit non-monetary transactions, Bitcoin accepts that block space will be auctioned to the highest-value use cases—which today are speculative inscriptions, not everyday payments. High fees are not a bug; they are the market clearing price for a scarce resource. But they crowd out the very peer-to-peer cash use case that launched Bitcoin.
History does not repeat, but it rhymes in code. The Blocksize War of 2017 produced Bitcoin Cash; this time, the war ended before it began. But the underlying tension remains: a network designed for “electronic cash” is now primarily a settlement layer for digital artifacts. The failure of BIP-110 means that all demand for cheap, expressive transactions must move to layer 2. Lightning, RGB, and Stacks become not optional but existential for Bitcoin’s utility thesis.
We are not building a future; we are auditing one. BIP-110’s defeat audits Bitcoin’s current state: it is a digital gold system that rejects any attempt to police usage, even when that usage degrades the experience for ordinary holders. The protocol is now effectively on autopilot, with innovation only possible outside the main chain.
Takeaway: Positioning for the Cycle As a fund manager, I track capital flows into Bitcoin L2 infrastructure as a direct consequence of this governance rigidity. The algorithm does not care about your conviction—only about incentive gradients. L2 is not a narrative; it is the only escape valve for a protocol that cannot change. Over the next 18 months, expect a surge in development and investment into Bitcoin-compatible L2s, from simple payment channels to complex smart contract platforms. The market will price this shift slowly, but those who study the gravity, not the candle, will see it coming.
