Over the past several weeks, somewhere around 1-2% of Bitcoin’s hash power has been signaling support for BIP110. That single figure tells you most of what you need to know, and it explains why the coming weeks could turn ugly for anyone operating Bitcoin Knots.
Before digging into the analysis, my bias is worth stating plainly: I consider BIP110 both pointless and damaging, and my expectation is that it fails. If I were betting, Scenario 1 below is where the money would go. Even so, I’ve tried to lay this out as factually as possible, taking each outcome on its own merits, because a clear map of the possibilities is more valuable right now than yet another round of argument.
What Knots actually shipped
The dispute over OP_RETURN grew heated enough that Bitcoin Knots went ahead and implemented BIP110 — a consensus protocol change that temporarily caps the size of OP_RETURNs while also aiming to cut down on other forms of data stored on Bitcoin's blockchain.
Consensus, however, is absent. There’s no agreement that a problem exists in the first place, nor that BIP110 addresses it in any meaningful manner, and the change constrains Bitcoin in ways that may prove harmful. The clearest signal of all: Bitcoin Core, still overwhelmingly the most widely used Bitcoin implementation, has not adopted it.
The clock keeps running regardless. Beginning at block 961,632 — expected to be mined on or around August 8 — BIP110 nodes such as Bitcoin Knots will reject any block that fails to signal support for the upgrade. Here’s how that could unfold.
Scenario 1: (almost) no miners signal
Judging by miner signaling as it stands today, this is the likely outcome.
Anyone running Bitcoin Core, or any other node or wallet that doesn’t enforce BIP110 — which describes the vast majority of the Bitcoin ecosystem — sees no change at all. Blocks continue to be mined on schedule. Transactions confirm as normal. Unless you’re following the drama on social media, you might never realize anything took place, and practically speaking nothing did. BIP110 simply doesn’t reach you.
Knots users face something else entirely. Because their software throws out non-signaling blocks, they would see virtually no new blocks — perhaps a handful across an entire week. Transactions coming in and going out wouldn’t confirm, or would crawl along at an agonizing pace. The nodes stall out. They stop being usable.
From there, BIP110 supporters face three choices: sit tight and hope conditions improve (see scenario 3), abandon the effort and revert to non-BIP110 software, or escalate with yet another protocol change — hard forking to a different proof-of-work mining algorithm, for instance.
That final option could reopen the door to GPU mining, allowing far more participants to mine blocks and construct a chain enforcing BIP110’s rules. The trade-off is a permanent break from the rest of the Bitcoin ecosystem, producing what would effectively be an entirely new cryptocurrency.
Scenario 2: (almost) all miners signal
This is the outcome several prominent BIP110 supporters are forecasting. The mandatory signaling window arrives and miners abruptly signal in force. Or, failing that, a majority signals and rejects any block that doesn’t, so every block making it into the chain carries a BIP110 signal.
In that case every node stays compatible — Knots and Core alike. Those signals indicate that miners intend to begin enforcing BIP110’s rules a further two weeks down the line. Transactions violating BIP110 should disappear from blocks by the start of September.
That’s the success case: a small faction of developers, miners and users pushes an upgrade through, and it ends up taking effect across the entire network anyway.
There’s a catch worth grasping, though. While blockchain signaling serves as a handy coordination tool for deploying soft forks, it offers no technical guarantee that the new rules will actually be enforced. Miners are free to signal support without running BIP110 software whatsoever. They may well do precisely that, purely to stop Knots nodes from rejecting their blocks during the mandatory signaling window.
Ultimately it’s economic nodes that enforce Bitcoin’s rules. At present there’s no indication that most of them will enforce BIP110, even in a world where every block signals. Should miners later go ahead and accept BIP110-violating transactions, economic nodes will accept those blocks while BIP110 nodes won’t. The chain splits regardless — just on a delayed timeline.
Scenario 3: a sizable minority signals
Here’s the version that splits the chain right away.
As things stand, roughly two percent of miners are signaling support — almost certainly too small a share to matter, which drops you straight back into scenario 1. So picture that figure multiplying tenfold. You also have to picture that minority rejecting non-signaling blocks itself. Without that, it’s indistinguishable from scenario 1 and BIP110 nodes stall out anyway, since they demand a signal on every single block.
A minority that signals and rejects begins constructing its own chain composed solely of signaling blocks. Confirmations on it would come far slower than usual — perhaps one or two an hour — but BIP110 nodes would remain reasonably functional. Give it a few months and mining difficulty adjusts, pushing block times back toward roughly six per hour. A couple of weeks beyond that, BIP110’s rules kick in.
Meanwhile Core and other non-enforcing nodes carry on more or less normally. Their block pace dips slightly, to maybe four or five per hour, before difficulty adjusts inside a couple of weeks and restores the six-per-hour average. BIP110’s rules never activate on that chain at all.
The end result: a BIP110 blockchain and an original-rules blockchain operating alongside each other as two separate cryptocurrencies, indefinitely.
The wipeout problem nobody wants to talk about
Scenario 3 carries a caveat of its own. Should the BIP110 chain eventually grow longer than the original — because miners migrated to it — then every node, Core and Knots alike, treats the BIP110 chain as the one true chain. The original chain is thrown away. Wiped out.
It’s precisely this one-sided wipeout risk that leads BIP110 supporters to expect miners to signal preemptively and head off a split entirely. The reasoning goes that miners have no appetite for mining a chain that might later be discarded, since that would wipe out every block reward they collected on it.
But there’s a counter-argument. Users and miners intent on defending the original chain are able to manually invalidate any block on the minority BIP110 chain while it remains in the minority. Their nodes will then refuse to switch over no matter how long that chain grows — which makes the split permanent as well.
If it splits, what do you actually hold?
A permanent split brings a new cryptocurrency into existence — a forkcoin. Anyone holding BTC at the instant of the split automatically receives an equivalent amount of coins on the new chain, much as happened with Bitcoin and Bitcoin Cash back in 2017. Reality is usually messier than that tidy description implies, and a BIP110-triggered split under any of these scenarios will probably come with complications.
Begin with the naming battle. Disagreement over which side gets to be “Bitcoin” (“BTC”) and which is the forkcoin is close to guaranteed. The likeliest outcome is that most people regard the original-rules chain as Bitcoin and stick some other label on the BIP110 chain. We’ll call it “BIP110 coin” for the moment.
Accessing those BIP110 coins demands BIP110-specific software — meaning Bitcoin Knots or an equivalent. They won’t appear on Core nodes or on most wallets.
On top of that, BIP110 as it stands has no replay protection. A transaction on one chain can be copied — “replayed” — onto the other. Send BTC and you might unwittingly send the matching BIP110 coin to an identical address on the BIP110 chain, or vice versa.
As for what the forkcoins would be worth, that’s anyone’s guess — including whether they’d be worth anything whatsoever. The absence of appetite for buying BIP110 coins via fork future contracts hints that post-split demand could be thin.
If you want to be certain you receive BIP110 coins assuming any materialize, self-custody your BTC so the private keys are yours, and hold off on sending transactions until things settle and there’s better clarity on how to move forward. That’s the sensible play no matter which scenario materializes.