BIP-110's mandatory activation path and potential parallel forks may turn a technical disagreement into a real risk of blockchain splitting.

Written by: Ashrith Rao

Translated by: Chopper, Foresight News

Bitcoin should not have to deal with both a market downturn and an internal route dispute at the same time. But right now, both troubles have come knocking.

Since the release of version 30 of the Bitcoin Core client in October 2025, a ideological divergence has been brewing; meanwhile, the crypto market is trying to find a price bottom amidst this dispute.

BIP-110: Countdown to Bitcoin Fork Confrontation

The key deadline for this game is set for August 7, 2026, corresponding to block height 961632. Everything that happens by then may determine whether Bitcoin continues down a single main chain or splits into two chains.

In December 2025, developer Dathon Ohm proposed the BIP-110 proposal (Note: BIP stands for Bitcoin Improvement Proposal), which aims to "reduce data temporary soft forks." This is a soft fork proposal with a validity period of one year.

The proposal focuses on data control within blocks and carries no political demands: within approximately one year, it seeks to limit OP_RETURN (Note: OP_RETURN is a script used to write additional data in Bitcoin transactions) output data to 83 bytes; most new output script limits will be set at 34 bytes; and it will also impose constraints on multiple technologies carrying external data, including large data pushes, witness items, and certain unspecified witness versions.

Historical data already existing on the blockchain will not be cleared; the rules only constrain future new transactions. The dispute centers on inscriptions and various non-financial data types that have continued to occupy Bitcoin block space since 2022.

Proponents of the proposal argue that these applications stray from Bitcoin's original positioning as a payment and settlement system, increasing the operational cost for full nodes and continuously expanding the unspent transaction output (UTXO) size.

The real controversy arises from the proposal's activation mechanism. BIP-110 relies on the bit-4 signaling mechanism and has designed a market-led, smoothly locked activation path: during a difficulty period of 2016 blocks, it needs to obtain 55% hash power voting support.

Since the monitoring started on December 1, 2025, the voting hash power percentage for the proposal has remained low, hovering between 0.3% and 0.4%. The latest observed data showed a minimum of 0% and a maximum of only 0.86%. If the regular voting channel cannot meet expectations, the proposal will implement a mandatory execution plan: enforcement will begin at block height 961632.

By this time, regardless of what attitude the majority hash power of the network holds, nodes running the BIP-110 compatible client (primarily Bitcoin Knots) will start rejecting blocks that do not support the rule.

Critics argue that this strategy, modeled after the 2017 UASF (User Activated Soft Fork), will elevate what seems to be a minor technical discussion into a significant governance dispute.

Current Hash Power Data Situation

The current total hash power of the Bitcoin network is about 940EH/s, while the voting hash power for BIP-110 is less than 1%, at only about 5EH/s. Most of the observable voting blocks come from the mining company Ocean, which has ties to Jack Mallers and Adam Back.

The vast majority of Bitcoin hash power holders either remain indifferent or clearly oppose the proposal. The significant gap in hash power support underscores the potential consequences if BIP-110's mandatory route is activated.

When a small number of nodes forcibly implement a set of rules that the vast majority of hash powers and nodes refuse to recognize, the rules will not take effect but will instead give rise to two separately legitimate blockchains. Both chains will recognize blocks that comply with BIP-110's stringent rules; however, non-BIP-110 nodes can accept blocks that do not meet the restriction conditions, while BIP-110 nodes will directly reject them.

The current price of BCH, being just a fraction of BTC, is the most straightforward example of how the market views a forked chain lacking sufficient hash power support.

The Positions of All Parties Become Clearer

As the deadline approaches, the strength of the opposing camp is not diminishing but rather increasing.

On July 18, Michael Saylor published a lengthy article titled "110 Reasons to Oppose BIP-110," launching a fierce critique. He argued that the Bitcoin consensus layer should not define the "reasonable use" of transaction fees. Rather than focusing on whether spam transactions are rampant, he is more cautious about the risk of precedent. Once consensus rules begin to differentiate between "compliant transactions" and "non-compliant transactions," this paradigm could become permanently fixed and may be abused by those manipulating rule iterations in the future.

He also pointed out that BIP-110 would limit future upgrade possibilities, for example, contract solutions like BitVM that rely on data flexibility would be constrained by the proposal.

Adam Back and Jameson Lopp have also raised similar but independent viewpoints: the activation mechanism itself is highly risky. Past successful Bitcoin upgrades, such as SegWit and Taproot, gained over 90% hash power support before officially taking effect. In contrast, the 55% threshold is already relatively low. Currently, the natural voting support rate is less than 1%, and forcibly initiating this will only create division rather than achieving consensus.

Many industry practitioners have chosen to take a neutral stance. Jimmy Song publicly stated, "I do not understand this mechanism well enough to judge the consequences of each path," which drew substantial criticism. In this intense debate, a neutral attitude is viewed by many as evading a position.

On the other side, developers of Bitcoin Knots and supporters of BIP-110 have pointed out the changes made in the October 2025 Core v30 version: the client has increased the OP_RETURN default relay strategy limit from 83 bytes to about 100,000 bytes, a more than 1200-fold increase.

The Core team defined this as a relay strategy adjustment rather than a consensus rule change and argued that relying on relay filtering cannot prevent spam data; external data can be embedded in ordinary transaction outputs in the form of hashes, making it difficult to distinguish and intercept.

From a technical perspective, this argument holds; relying on the relay layer cannot completely prohibit arbitrary data storage. This is also the core argument of BIP-110 opponents, that the plan is a surface-level solution that is hard to root out the problem and might directly lead to a blockchain split during the attempt to fix it.

It was the uncommunicated release of the v30 update by Core that gave rise to the Bitcoin Knots fork; a few months later, as a countermeasure, the BIP-110 proposal emerged.

The Second Risk Point: Sztorc Proposes eCash Hard Fork

In addition to BIP-110, the market will face another variable in August. Alongside BIP-110, Paul Sztorc, the proposer of the Drivechain proposal (BIP 300/301), announced an independent hard fork aimed at block height 964000.

This plan will create a completely new SHA-256d public chain that is initially identical to Bitcoin. After the fork is initiated, the network difficulty will be readjusted; at the fork block, all BTC holders will receive new forked assets in equal proportion.

Unlike BIP-110, this fork does not impose data restrictions, with the primary goal of promoting scaling and sidechains, implementing sidechain expansion solutions that have long been delayed from going live on the mainnet.

These two fork events have independent origins but will create a cumulative risk effect. Before and after the activation of the mandatory signal period, exchanges, custodians, wallet service providers, and institutional holders of coins will all need to synchronously decide whether to support BIP-110 while also managing the distribution of 1:1 fork tokens. There is no collaborative arrangement between the two; it is merely a coincidence of timing, yet it will impose enormous pressure on the entire industry within three weeks.

Market Impact

Since hitting a peak in October 2025, Bitcoin is currently at a pricing bottom-building phase. Although some institutions have continued to accumulate during the decline, BlackRock's IBIT Bitcoin ETF saw significant outflows in June.

The market is already digesting macro-level price reassessments, with governance disputes and potential fork tail risks arriving in succession; if this were at a bull market peak, such risks might be easily overlooked, but the current environment amplifies panic sentiments.

The prediction market has not yet viewed BIP-110 as a significant event with independent and high liquidity. Polymarket's Bitcoin price contracts from mid to late July show that traders generally expect Bitcoin prices to remain in the $50,000 to $60,000 range in early August.

This aligns with the hash power data: if the hash power voting remains below 1% three weeks in advance, BIP-110 will most likely fail to secure activation through regular channels.

The most immediate suspense lies in whether the nodes of the Bitcoin Knots camp will still insist on the mandatory strategy after the regular activation path is declared a failure. The final decision power is not controlled by market forces but lies in the hands of a small number of client maintainers.

Once the mandatory route is implemented, the market might react in predictable ways: the original chain supported by the vast majority of miners and exchanges is likely to become the core of liquidity, hash power, and price pricing.

"The market will ultimately resolve the dispute" and "the market will resolve the dispute without incurring costs" are two completely different propositions.

Chain forks will give rise to numerous short-term troubles: replay attack risks, disordered exchange listing rules, uncertainty in custody asset ownership, and risk premiums (reflected in wider bid-ask spreads and diminished order depth). In an environment where market confidence is already weak, the shocks will be more pronounced.

On August 7, the market will face a severe test: whether Bitcoin can truly shake off the shadow of the governance crisis from 2017.