On July 2024, Michael Saylor published a list of 110 reasons to vote against BIP-110. Most observers focused on the technical restrictions: limiting script public key lengths, disabling certain Taproot paths, capping witness stack items. They missed the real threat. The number that should keep every Bitcoin holder awake at night is 55. That is the percentage of miner hashpower required to activate the proposal, combined with the deliberate omission of a FAILED state. In a system built on the principle of supermajority consensus, this is not a minor tweak. It is a paradigm shift.
BIP-110 is a Bitcoin Improvement Proposal that aims to impose seven consensus-level restrictions on transaction scripts and witness data. Its stated goal is to curb the growing use of the blockchain for non-financial data storage, particularly inscriptions and Ordinals. The proposal modifies rules around script public key lengths, the number of witness stack items, and the allowed Taproot annex and script-path spending conditions. While the motivation is understandable—some argue that data bloat increases node costs and reduces censorship resistance—the mechanism chosen is deeply problematic.
The activation mechanism is where the systemic risk resides. Under the traditional BIP-9 process, a proposal requires 95% miner signaling within a defined timeout period; if it fails, it transitions to a FAILED state and cannot be activated again. BIP-110 lowers the threshold to 55% and removes the FAILED state entirely. This means that once a signaling period begins, even if only a simple majority of miners signal support, activation proceeds automatically. The remaining 45% of miners are forced to either comply or face a chain split. This design effectively lowers the bar for consensus changes from near-unanimity to a simple majority. As Saylor argues, the governance mechanism itself is more dangerous than the problem it aims to solve.
From my experience reverse-engineering the Terra-Luna death spiral in 2022, I learned that governance mechanisms often hide fatal flaws in plain sight. In Terra, the flaw was the inability to handle a run on the algorithmic peg—a feature, not a bug. Here, the flaw is the inability to handle a minority of miners who disagree. Code does not lie, but it often obscures intent. BIP-110’s intent may be to clean up block space, but its design opens the door to future proposals that could alter supply schedules, adjust difficulty algorithms, or even freeze UTXOs—all with just 55% support. The bell cannot be un-rung.
I have spent years auditing smart contracts and mapping systemic interdependencies. In 2017, during a three-month audit of a cross-border payment protocol, I discovered an integer overflow in a multi-sig wallet that could have drained 15% of liquidity. The developers had chosen an efficient signature structure, but the fundamental assumption—that integer bounds would never be exceeded—was wrong. BIP-110 makes a similar assumption: that 55% support constitutes sufficient consensus. It doesn’t. The macro view reveals what the micro ledger hides: a proposal that appears to solve a narrow data-storage problem actually undermines the entire governance foundation of Bitcoin.
The common counterargument is that the content restrictions are the main issue—they will alienate the Ordinals community and stifle innovation on Layer 1. But this misses the point. The content can be addressed through non-consensus means: node operators can choose to filter certain transactions, and Layer 2 solutions can absorb the demand. Saylor himself advocates for these alternatives. The true blind spot is the normalization of low-threshold consensus changes. If BIP-110 passes, even if the content restrictions are later reversed, the precedent remains. Future proposals with far more invasive changes—altering the supply schedule, adjusting the difficulty algorithm, or even freezing certain UTXOs—could be activated with just 55% miner support. The bell cannot be un-rung. As I noted in my 2022 post-mortem on Terra, the collapse was not a bug; it was a feature of the design. Similarly, the failure of BIP-110 would not be the content restrictions, but the dangerous precedent it sets.
Some may argue that the market will simply reject the chain if it becomes too risky. But Bitcoin’s value proposition is its immutability and predictability. Even a small probability of a 55% takeover is enough to increase the risk premium. Post-ETF, Bitcoin has become Wall Street’s toy—its price is driven by institutional flows and macro narratives. But its underlying governance still depends on a loose coalition of developers, miners, and users. BIP-110 tests whether that coalition can resist a low-threshold capture. The bear market environment amplifies the urgency; survival matters more than gains. If this proposal gains traction, it will not show up in price immediately, but it will erode the trust that underpins Bitcoin’s long-term value.
From a chain analysis perspective, BIP-110 would impact downstream projects unevenly. Ordinals and inscription protocols would face direct restrictions on script public key lengths and Taproot path usage, potentially rendering many existing inscriptions non-standard. RGB and Taproot Assets, which rely on Taproot script-path spending, might need to adapt their commitment schemes. Lightning Network is less affected, as most lightning transactions use simple key-spends. But the broader point is that any application building on Bitcoin’s programmability now faces an additional risk: a future BIP with similar activation logic could surgically remove their functionality. This creates a chilling effect on innovation. The macro view reveals what the micro ledger hides: the real cost of BIP-110 is not the bytes saved, but the uncertainty injected into every project building on Bitcoin.
The governance risk is not theoretical. In the history of Bitcoin, no change has ever been activated with less than overwhelming support—typically 95% or more. BIP-110 proposes to break that tradition for a relatively minor issue. If passed, it sets a precedent that any group controlling 55% of hashpower can change the rules. This is not a slippery slope; it is a cliff. The proposal’s authors may have good intentions, but the mechanism they chose is a Trojan horse.
What should investors watch? Three signals over the next three to six months. First, the reaction of Bitcoin Core developers: if leading contributors publicly oppose the proposal, it has little chance of being merged. Second, miner signaling: if more than 30% of mined blocks signal support, the threshold becomes dangerously close. Third, the BIP editors’ decision: if the proposal is assigned a number and enters the formal process, the debate will intensify. Until then, the risk remains latent but real. Code does not lie, but it often obscures intent—and the intent of BIP-110, even if well-meaning, is to alter the consensus rules with a mechanism that weakens the network’s core defense: the requirement of overwhelming agreement.
The takeaway is uncomfortable. Bitcoin’s governance has long been its greatest strength and its greatest vulnerability. Proposals like BIP-110 expose that vulnerability in a way that price charts cannot. The safest position for any holder is to understand that the stability of Bitcoin rests not on its code alone, but on the shared belief that the rules change only under extreme consensus. BIP-110 challenges that belief. The question is whether the community is willing to pay the price of precedent.