BIP-110
Reduced Data Softfork

Overview

BIP-110 (Reduced Data Softfork / Reduced Data Temporary Softfork) is a Bitcoin consensus-layer improvement proposal authored by Dathon Ohm. It aims to temporarily (~1 year) restrict the ability to embed arbitrary data in Bitcoin transactions, correcting the incentive distortions caused by inscription abuse (Ordinals, BRC-20) and refocusing development on Bitcoin's core function as sound money.

Why BIP-110?

Since the "inscription" hack was first exploited in 2022, embedding arbitrary data into Bitcoin transactions has escalated, creating significant unnecessary burdens on node operators and diverting development focus and incentives away from Bitcoin's fundamental purpose as sound, permissionless, borderless money.

BIP-110 disables the most harmful data-abuse methods at the consensus level while preserving all known monetary uses. It sends a clear signal across the ecosystem: arbitrary data storage will continue to be actively resisted.

Key Design Principles

• Temporary — The softfork lasts only ~1 year (52,416 blocks), then auto-expires, giving the community time to design a better long-term solution
• UTXO Grandfather Clause — UTXOs created before activation are fully exempt, ensuring existing funds cannot be frozen or become unspendable
• Lowered Threshold (55%) — As an emergency temporary measure, only 55% hashrate is needed for activation
• Simple & Auditable — The seven rules are deliberately simplified to minimize review time and avoid unintended side effects

Will BIP-110 freeze my Bitcoin?

Extremely unlikely. The UTXO grandfather clause fully exempts UTXOs created before activation. Funds could only be affected under a confluence of unlikely conditions (Taproot + presigned transaction + created AND spent during the fork + used a violating Tapleaf + key path unavailable with no other spendable Tapleaf). Standard Bitcoin usage is completely unaffected.

Why is it temporary?

These restrictions would severely constrain future upgrades. To avoid making "perfect the enemy of good enough," simple temporary rules are deployed first, giving the community one year to develop a better long-term solution. The community can renew, improve, or let it expire.

Is 55% threshold too low?

The standard 95% threshold is designed for permanent changes. As an emergency temporary measure, the lower 55% threshold enables rapid deployment. If broadly unpopular, miners will simply withhold signaling.

Why ban OP_IF/OP_NOTIF?

With Taproot, conditions can be evaluated off-chain, revealing only the intended execution path. OP_IF in Tapscript is not only redundant but also commonly abused to inject data. Closing this gap costs almost nothing while signalling that such abuses are unwelcome.

Why limit the Taproot control block?

The previous limit allowed 2¹²⁸ scripts — far beyond any real need. 257 bytes (128 leaves) is sufficient for modern complex transactions. This may affect advanced contracts like BitVM — but those are still early-stage and testnets suffice until the softfork expires.

Why not rely on the fee market?

The data storage market has completely different incentives from the payment market. Miners collect a one-time fee, but the burden of storing data falls permanently on all node operators — who never receive any portion of that fee, yet are forced to download, store, and serve the data forever. The problem worsens when the content is objectionable to operators.

Can data embedding be fully solved?

No. Completely preventing data embedding is impossible. What this softfork does is require users storing large unencrypted files on-chain to disguise data as financial data and/or split it across multiple pushes. This significantly raises the cost of abuse and reinforces that data storage is not a supported Bitcoin use case.

Is this a slippery slope?

No. While new at the consensus level, these rules merely codify long-standing Bitcoin principles. They do not impose restrictions on monetary activity. The temporary nature reinforces this: if not renewed, it expires in one year.