Nakamoto Founder David Bailey Calls Failed BIP-110 Fork Bullish for Bitcoin
The proposed BIP-110 soft fork, which would have limited data on the Bitcoin blockchain, has been dropped weeks before its planned activation. Nakamoto founder David Bailey called that “incredibly bullish for Bitcoin.” My take: he is reading the cancellation as a governance signal, not just a technical retreat. Bitcoin users rejected tighter data controls and kept the network more open, even though that means more fights over block space. Messy, but telling.
Bailey announced the cancellation on X and called the push for BIP-110 a “hostile takeover attempt.” Developer Dathon Ohm introduced the proposal in December 2025 under another name too: the Reduced Data Temporary Softfork, or BIP-444. It was meant to “cut down on unnecessary data” in Bitcoin transactions. Supporters said some data use pulls Bitcoin away from money and toward a cluttered settlement layer. The proposed limits had teeth: new outputs capped at 34 bytes, some data types at 83 bytes, plus other technical limits for one year. Older coins would not have been affected. I’ll be honest: that last detail matters, but it does not make the proposal feel small.
BIP-110 never got close to broad support. By February 2026, fewer than 10% of Bitcoin nodes signaled for it, and none of the top 20 mining pools backed it. Bailey said that was not apathy. To him, it was a rejection of the proposal itself. He called the fight “information warfare” and accused some developers of trying to “hijack the network.” Most summaries frame this as openness versus spam control. That’s only half right. It is also a power fight over who gets to define “legitimate” Bitcoin use. One side wants room for experiments and new uses. The other wants tighter rules to protect Bitcoin as plain, hard money. Why does this matter? Because abstract governance debates become very concrete once users think their wallets, fees, or coins are at risk.
The failed fork also matters for Bitcoin’s safe haven pitch. The immediate risk of a chain split is lower now, but the complaints about data bloat and fees are still there. Critics of heavy data use say it can make running a node harder, which could push the network toward fewer operators and weaken censorship resistance. That matters to people who buy BTC because they see it as neutral money. During the January 2020 Soleimani strike, BTC rose 8% within 72 hours, helped by the neutrality and decentralization story. If users start to think those traits are slipping, confidence can go with them. BitMEX Research also warned that BIP-110 could “break wallets, disrupt popular tools, and even result in people losing funds.” That would have been ugly. Bitcoin’s reputation depends partly on being boring and reliable. This proposal did not clear that bar.
Other analysts saw a different problem: data limits might not stop spam or malicious transactions anyway. Counter to the usual advice, stricter filters can create new incentives instead of removing the old ones. Transactions can be reshaped, data can move, and users can coordinate around whatever rule set survives. The worse outcome would be a split market with rival coins, like Bitcoin Cash and Bitcoin SV. This fight is not new. Some users think extra data clogs Bitcoin and hurts decentralization. Others argue that limits can be worked around. Martin Habovštiak proved the point by uploading a 66-kilobyte image to the blockchain even with new limits in place. The argument got louder after an October software update removed long-standing data limits. Some users moved to Bitcoin Knots in response, and by February 2026 it accounted for nearly a quarter of Bitcoin nodes. That is not a footnote. BIP-110 may be dead, but the fight is not.
What this means
The rejection of BIP-110 shows that Bitcoin users, at least for now, would rather keep the network flexible than force through strict data rules. It also suggests they prefer one messy chain over a cleaner-looking fight that could split the network. Good. Nobody needs that confusion unless they are trading the chaos. Yes, this slightly contradicts the pro-openness framing above: flexibility still has costs. But the market signal here is stability. Node operators and miners did not want a change they saw as too restrictive, too disruptive, or too centralized in spirit.
The fight over data usage and scaling will come back. It always does. Investors should watch transaction fees, especially since more than 67% of current network transactions are tied to data. Is this overkill? For anyone holding BTC as a macro hedge, no. If fees rise and stay high, Bitcoin’s use as a payment network takes a hit, even if the store of value case holds up. I would also watch smaller node groups, not just headline mining pools. A minority could still try to activate BIP-110 on its own and create a parallel version of Bitcoin. Mining pool statements matter. Node signaling data matters too. If support starts clustering again, volatility could come back quickly.