BIP-110 threatens 1.7M bitcoin as 12-year-old dispute splits community

A Bitcoin Improvement Proposal that would restrict data inscriptions has reopened a decade-old governance feud, with Nakamoto CEO David Bailey reviving a 2014 blacklisting incident to challenge developer Luke Dashjr's credibility.

Bitcoin's BIP-110 soft fork faces mounting opposition as a 12-year-old controversy over developer Luke Dashjr's past blacklisting resurfaces before the August activation deadline.

"Dashjr secretly added Bitcoin address blacklists to the Gentoo Linux package he maintained in 2014, blocking payments to gambling services from the default build," David Bailey, chief executive officer of Nakamoto, said in a post on Friday, arguing the record disqualifies Dashjr from steering Bitcoin development.

The proposal, which would tighten restrictions on block content by limiting standard transaction outputs to 34 bytes and capping OP_RETURN outputs at 83 bytes, needs 55 percent of miners to flag support. Yet backing has stayed below 1 percent since December 2025, never topping 0.79 percent, according to Farside Investors data. The firm reported 17 new blocks flagging BIP-110 support on July 9, triggering automated monitoring alerts. Bitcoin traded near $62,821, with the 50-day exponential moving average at $62,386 providing support, while a bearish MACD crossover pointed to downward pressure.

More than 1.7 million bitcoin, worth roughly $107 billion at current prices, currently reside in pay-to-public-key outputs that would become unspendable under the new rules, though older outputs would be grandfathered in. The rules would expire after 52,416 blocks, or roughly one year. MicroStrategy's Michael Saylor called the proposal a "self-inflicted protocol risk," while Blockstream's Adam Back warned of a fork that could strand supporters on a separate chain. The activation window opens in early August.

The 2014 Incident That Won't Stay Buried

The 2014 patch shipped by default on Gentoo's Bitcoin build, blocking transactions to services such as SatoshiDice. Node operators noticed only when transactions failed, generating a widely shared thread on Bitcoin forums. Even then, a fellow Core developer said such changes belonged in a separately named version, not the default software. Dashjr later reversed the default, made the feature optional, and apologized. Bitcoin Core never shipped the blacklists.

Supporters of Dashjr stress the context of the incident. The blacklist targeted gambling services during a period when Bitcoin's regulatory status was less defined. Dashjr has since focused on protocol integrity, and his Bitcoin Knots client already enforces BIP-110's restrictions. Knots powered about a fifth of the network's public nodes during 2025's spam fight, data shows. He has described the proposal as existential for Bitcoin, warning the network fails if the proposal fails.

Governance at a Crossroads

The dispute has reopened long-running questions about who controls Bitcoin's rule changes. Unlike the 2017 SegWit activation, which carried broad market backing and reached the required 95 percent threshold, BIP-110 lacks consensus among miners, developers, and major holders. The proposal's 55 percent activation threshold is unusually low for Bitcoin, where soft forks historically required near-unanimous support.

Bailey argued that Wall Street misunderstands the stakes, asking which chain cash-settled CME Bitcoin futures would track in the event of a split. "Very clear to me the Wall Street universe has no idea how Bitcoin governance works," Bailey added. "Like which chaintip does a cash settled Bitcoin future traded on the CME settle against? Whether TradFi likes it or not, they're locked in the insane asylum with all of us."

Critics say Bitcoin's $1.3 trillion market value should not hinge on one developer's preferences. Back has dismissed the August deadline as the road to a "minority altcoin," a small spinoff few would follow. The proposal also carries risks for wallet users: some Miniscript-compatible addresses could become unspendable under the new rules, effectively freezing funds sent after activation. The 2014 fight now stands in for a bigger question: who gets to shape Bitcoin.

This article is for informational purposes only and does not constitute investment advice.