Bitcoin Faces Chain Split Threat as BIP-110 Supporters Defy Global Hashpower

A potential chain split looms over Bitcoin as supporters of BIP-110, a proposal to restrict data rules for about one year, prepare to enforce their rules. The proposal would limit the size of certain data elements in transactions, including those used by Ordinals inscriptions and token protocols.

Backers argue that this restriction would slow down blockchain growth, reduce node operating costs, and push Bitcoin back towards straightforward financial transfers. However, critics like Strategy's Michael Saylor, who has publicly rejected BIP-110, say forcing a split without broad miner and economic backing adds risk while delivering no benefit to the network.

The proposal is being distributed mainly through Bitcoin Knots, an alternative implementation of Bitcoin's node software. BIP-110 sets a 55% miner signaling threshold, which is significantly lower than the roughly 95% level associated with earlier Bitcoin upgrades.

At block 961,632, BIP-110 nodes are scheduled to reject nonsignaling blocks, potentially leading to a chain split. Major exchanges have issued little public guidance on BIP-110, and none have committed to listing a separate token.