BIP-110 Faces Final Test as Nodes Prepare to Reject Blocks

Bitcoin is heading towards a rare test this weekend as nodes running BIP-110 software prepare to reject blocks produced by almost all miners. The proposal, which aims to temporarily restrict non-payment data on the blockchain, has garnered support from its proponents but faces significant opposition from miners and critics.

The Bitcoin Improvement Proposal (BIP)-110 is a user-activated soft fork that seeks to tighten consensus rules to make inscription techniques used by Ordinals and Runes impractical. Its supporters argue that this move will prevent non-financial data from consuming block space, making it more expensive to run and undermining the purpose of Bitcoin as digital money.

However, its critics point out that BIP-110 lacks significant miner support, with public signaling from mining pools being negligible at under 3%. The proposal's proponents argue that miners do not govern Bitcoin but merely produce blocks, while nodes decide whether those blocks comply with rules.

The activation of BIP-110 is expected to occur on August 9, with the actual activation following four weeks later. Some exchanges have planned to temporarily pause deposits and withdrawals around the activation window, reflecting the reality that Bitcoin consensus is not produced by hash rate alone or node counts in isolation but by coordination among miners, exchanges, wallet providers, and so on.