How Bitcoin Changes and Why BIP 110 Matters Right Now

Bitcoin has no CEO and no board of directors. So how does the protocol actually change? And what does the BIP 110 debate happening right now tell us about who really controls Bitcoin?

One of the most common misconceptions about Bitcoin is that someone controls it.

Not a company. Not a government. Not even the developers who write the code. Nobody sits at the top of Bitcoin and decides what it does or how it evolves. That's not a bug, it's the entire point. But it raises a legitimate question: if nobody controls Bitcoin, how does it ever change?

The answer is one of the most fascinating things about the protocol, and understanding it helps you understand what's happening on the Bitcoin network right now, today, August 8th, 2026, as BIP 110 hits a critical milestone.

What Is a BIP?

BIP stands for Bitcoin Improvement Proposal. It's the formal process through which changes to the Bitcoin protocol are suggested, debated, and potentially adopted.

Anyone can write a BIP. You don't need permission. You don't need credentials. You publish a document describing the proposed change, the technical reasoning behind it, and how it would be implemented. From there, the Bitcoin community developers, miners, node operators, users, companies debates it openly.

Most BIPs never go anywhere. Some get refined over years before any movement happens. A few become the foundation of significant upgrades. SegWit, Taproot, the Lightning Network, all of these started as BIPs worked through an open, contentious, messy, decentralized process.

This is how a monetary network with no CEO makes collective decisions.

How Changes Actually Get Activated

There are two main types of protocol changes in Bitcoin: soft forks and hard forks.

A hard fork changes the rules in a way that is not backward compatible. Old nodes would reject blocks produced under the new rules. This creates a split, two separate chains, two separate coins. Hard forks are rare in Bitcoin because they require near-universal adoption to avoid fracturing the network. Bitcoin Cash in 2017 is the most famous example of what happens when a hard fork fails to achieve consensus.

A soft fork tightens the rules rather than expanding them. New blocks produced under soft fork rules are still valid to old nodes, the change is additive and backward compatible. This is the preferred path for Bitcoin upgrades because it doesn't force anyone off the network immediately.

But even soft forks require coordination. The traditional mechanism is miner signaling, miners indicate their readiness to enforce the new rules by marking the blocks they produce. Once a threshold of blocks signal support within a set window, the upgrade locks in and activates. The historical standard has been 95% of blocks over a two week period, which ensures overwhelming consensus before anything changes.

This is how Taproot activated in 2021. Miners reached the threshold. Nodes enforced it. The upgrade went smoothly. No drama.

BIP 110 is a different story.

What Is BIP 110?

BIP 110, formally called the Reduced Data Temporary Soft fork, is a proposal to temporarily restrict the amount of arbitrary non-financial data that can be embedded in Bitcoin transactions. It was authored by the pseudonymous developer Dathon Ohm, with technical input from long-time Bitcoin developer Luke Dashjr, and assigned its BIP number in December 2025.

The stated goal is to protect Bitcoin's purpose as sound, permissionless money by reducing the burden that data storage places on the network. BIP-110

The proposal adds seven consensus rules that cap the size of data fields in new transactions. The common shorthand is an 83-byte limit on OP_RETURN outputs. Existing Ordinals and inscriptions remain on the blockchain untouched, the soft fork only applies to new outputs created after activation. And critically, it ends on its own: the rules expire 52,416 blocks after activation, which works out to about one year.

To understand why this is controversial, you need to understand what it's targeting.

The Ordinals Problem

In 2022, a developer named Casey Rodarmor discovered a way to embed arbitrary data, images, text, entire files, directly into Bitcoin transactions using a technique called inscriptions. This gave birth to Ordinals, Bitcoin NFTs, BRC-20 tokens, and Runes: a wave of non-financial activity that began competing with regular payments for block space.

Supporters of these protocols argued they were valid uses of Bitcoin's block space. If the rules allow it, it's allowed. They also pointed out that the fees generated by inscription activity contributed to miner revenue.

Critics argued that this activity was spam. It was exploiting loopholes in the protocol to store data cheaply, crowding out legitimate transactions, driving up fees for ordinary users, bloating the blockchain, and forcing node operators to store data that had nothing to do with sound money.

Starting with the inscription hack in 2022, a trend emerged around embedding arbitrary data into Bitcoin transactions that creates unnecessary burdens on node operators and diverts development focus from Bitcoin's fundamental purpose as sound, permissionless, borderless money. To get an understanding of the type of non monetary data that resides on the Bitcoin blockchain take a look at this ordinal scanner. https://ordiscan.com/ Then ask yourself a question, is Bitcoin a monetary network or a data storage network?

BIP 110 is the formalized attempt to address the non monetary data at the protocol level.

Why Today Matters

Today, Saturday August 8th, Bitcoin hits block 961,632. Every node running Bitcoin Knots with BIP 110 enforcement starts rejecting blocks that don't set version bit 4.

This is the mandatory signaling window, a feature built into BIP 110's activation mechanism.

BIP 110 works like a vote. Miners signal their support by marking the blocks they produce. If enough miners signal within a set window, the upgrade locks in. If they don't reach that threshold voluntarily, a mandatory window kicks in where nodes enforcing BIP 110 begin rejecting blocks from miners who haven't signaled support.

That mandatory window starts today. Nodes running Bitcoin Knots with BIP 110 support will begin rejecting blocks that don't signal, creating a potential divergence between those nodes and the rest of the network.

Activation is projected for block 965,664 near September 6, 2026, and the rules expire on their own about a year later. The mandatory window is designed to force activation regardless of miner support which is precisely why it's so contentious.

The Governance Question

This is where BIP 110 becomes about more than spam. It becomes a question about who actually controls Bitcoin.

Traditionally, Bitcoin soft forks required 95% of miners to signal support before any change could lock in. That near-unanimous threshold existed for good reason as it meant no single mining pool or small group of pools could force a change on the rest of the network.

BIP 110 lowered that bar to 55%. To understand why that matters, you need to understand how concentrated Bitcoin mining has become.

Today, the five largest mining pools: Foundry USA, AntPool, F2Pool, ViaBTC, and MARA Pool, collectively control the vast majority of Bitcoin's total hashrate. Foundry alone regularly mines 25 to 30% of all blocks. That means under the old 95% threshold, any one of these pools could effectively veto a protocol change simply by refusing to signal. A handful of corporations, many with ties to large institutional investors held outsized power over the future of a decentralized monetary network.

That's the problem BIP 110 supporters were trying to solve. If a small group of industrial miners can block any upgrade indefinitely, then Bitcoin's governance is not as decentralized as it appears. The 55% threshold was designed to prevent mining centralization from becoming a chokehold on the protocol.

But critics argue the lower threshold creates a different problem, it means a coalition representing just over half the network's hashrate could impose changes that the other half hasn't agreed to.

This is where nodes become the critical check in the system. Miners produce blocks, but nodes decide which blocks they accept. No miner regardless of how much hashrate they control can force a node to follow rules it doesn't enforce. If the economic majority of the network, the exchanges, the wallets, the businesses, and the individual users running nodes reject a change, that change doesn't stick regardless of what miners do.

Nodes are the immune system of the Bitcoin network. Miners provide the work. Nodes enforce the rules. BIP 110 is a live test of exactly how that balance of power functions when the two sides don't agree.

What This Means for You

If you're a casual Bitcoin holder, the safest thing you can do right now is wait.

During a potential chain split, two versions of the Bitcoin blockchain can exist simultaneously, each following a different set of rules. In that scenario, a transaction broadcast on one chain may not be valid on the other. This creates real risk for anyone sending or receiving Bitcoin while the network is in disagreement with itself. Until the dust settles and one chain clearly prevails, holding off on transactions is the prudent move.

Major exchanges and wallets will likely follow the chain with the most proof of work behind it. Given that miner support for BIP 110 sits below 3%, that chain is almost certainly the non-BIP 110 chain. But "likely" is not "certainly," and in a live governance event like this one, certainty is in short supply.

It remains to be seen which side will prevail. What we will say is this: at Hodl & Hash, we believe Bitcoin should be money. Not data storage. Not a platform for NFTs and tokens. The original vision of a peer to peer electronic cash system is worth protecting, and BIP 110 is a proposal rooted in that belief.

How this resolves will tell us a great deal about who actually governs Bitcoin. Watch closely. Hold your coins. And if you can, hold off on transacting until the network reaches clarity.

But this is exactly why running a node matters. When you run a node, you choose which rules you enforce. You decide what Bitcoin means to you. A node operator running Bitcoin Knots today is casting a vote saying that Bitcoin's block space should be reserved for sound money, not data storage.

A node operator running Bitcoin Core is casting a different vote — saying the protocol should remain neutral and that these decisions shouldn't be made at the consensus layer.

Neither of those voters is wrong for having an opinion. But only the people running nodes actually have one.

The Bigger Picture

BIP 110 will either activate or it won't. The rules will expire after a year regardless. But the debate it has sparked is permanent.

This is why the debate has moved beyond Ordinals. It asks whether Bitcoin should remain neutral toward every transaction that follows its rules, or whether the protocol should actively favor monetary activity.

That's not a technical question, it's a philosophical one. And it's one that the Bitcoin community will be wrestling with long after BIP 110.

What it confirms, regardless of which side you're on, is something worth understanding deeply: Bitcoin has no CEO. No regulator. No board. The protocol changes based on the choices made by miners, developers, and node operators around the world.

Your node is your seat at that table. Grab your seat and run a node.

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