Bitcoin’s Protocol Update Crisis: BIP-110 Explained

Bitcoin doesn’t update like your iPhone—and that’s both its strength and its biggest risk.

When Apple wants to change iOS, Tim Cook doesn’t need to convince millions of independent device owners to manually approve each modification. But Bitcoin operates differently. Every change to its protocol requires achieving consensus among thousands of independent miners, node operators, developers, and users scattered across the globe. This decentralized decision-making process is exactly what makes Bitcoin resilient against centralized control—but it also means that critical upgrades can become battlegrounds that threaten to split the network.

BIP-110 stands as one of the most instructive examples of how Bitcoin’s upgrade process can go wrong, and why the stakes are so incredibly high when the network faces decisions about its fundamental architecture.

What BIP-110 Proposed and Why It Ignited a Civil War

BIP-110 (Bitcoin Improvement Proposal 110) emerged during one of the most contentious periods in Bitcoin’s history: the block size wars of 2015-2017. To understand why this proposal became so controversial, you need to grasp what it was trying to solve.

Bitcoin blocks—the containers that hold transaction data—were limited to 1 megabyte in size. This limit was hardcoded into the protocol as a spam prevention measure in Bitcoin’s early days. But as Bitcoin’s popularity exploded, that 1MB limit became a chokepoint. Blocks filled up, transaction fees skyrocketed, and confirmation times stretched from minutes to hours.

BIP-110 proposed increasing the maximum block size, allowing more transactions to fit into each block. On the surface, this seems logical: if there’s a traffic jam, widen the road. But in Bitcoin’s decentralized architecture, this simple solution created profound technical and philosophical divisions.

The Technical Controversy:

Larger blocks mean more data that full nodes need to download, verify, and store. Opponents of BIP-110 argued that bigger blocks would price out ordinary users from running full nodes—requiring expensive hardware and bandwidth that only corporations or wealthy individuals could afford. If running a node becomes too expensive, fewer people do it. Fewer nodes means more centralization. More centralization means Bitcoin becomes vulnerable to the exact corporate and government control it was designed to escape.

Proponents countered that Bitcoin’s value proposition required it to function as a usable payment system. If fees became too high and transactions too slow, users would abandon Bitcoin for alternatives. What good is decentralization if nobody uses the network?

The Stakeholder Battlelines:

The debate split the community into hostile camps:

– Large miners generally supported bigger blocks because more transactions meant more fee revenue

– Small-block advocates (often called “Core supporters”) prioritized node decentralization over transaction capacity

– Businesses and payment processors needed higher throughput to make Bitcoin commercially viable

– Cypherpunk purists viewed any compromise on decentralization as an existential betrayal

– Everyday users found themselves caught in the crossfire, watching fees rise while developers fought

BIP-110 and related proposals (like BIP-101, BIP-102, BIP-103) represented different approaches to the same problem, but none could achieve the consensus needed for activation. The controversy eventually led to the 2017 Bitcoin Cash fork—a permanent split that created a separate cryptocurrency following a different development path.

This wasn’t just a technical disagreement. It was a battle over Bitcoin’s fundamental identity.

How Bitcoin’s Decentralized Update Process Actually Works

To understand why BIP-110 failed, you need to understand Bitcoin’s Byzantine governance structure.

The BIP Process:

Anyone can write a Bitcoin Improvement Proposal. The process starts with an idea, progresses through community discussion, gets refined into a technical specification, and eventually gets submitted for consideration. But here’s where Bitcoin diverges sharply from traditional software development:

There’s no Bitcoin CEO who can decree that BIP-110 shall activate on June 1st. There’s no board of directors with voting rights. Bitcoin Core developers can review and merge code into the reference client, but they can’t force anyone to run it.

The Four Power Centers:

1. Developers write the code, but possess no enforcement mechanism

2. Miners process transactions and can signal support for upgrades through block voting

3. Node operators validate blocks and transactions, enforcing consensus rules

4. Economic actors (exchanges, businesses, users) ultimately decide which chain has value

For a protocol change to succeed, it needs buy-in from all four groups. Miss any one, and you risk a chain split.

Activation Mechanisms:

Bitcoin has experimented with different activation methods:

– Miner-activated soft forks (MASF): Miners signal readiness by including special data in blocks. When 95% threshold is reached, the upgrade activates. This worked for BIP-9 version bits.

– User-activated soft forks (UASF): Node operators coordinate to enforce new rules on a specific date, with or without miner support. This nuclear option was threatened during the SegWit activation standoff.

– Speedy Trial: A modern hybrid approach used for Taproot, giving miners a limited window to signal before falling back to other methods.

BIP-110 and the broader block size debate revealed the weakness of pure miner signaling. Miners might support larger blocks for revenue reasons, but node operators could reject those blocks. Economic actors might value one chain over another regardless of hash power. This coordination problem has no clean solution.

The Game Theory Nightmare:

Every stakeholder group has different incentives:

– Miners maximize revenue (bigger blocks = more fees per block)

– Users minimize costs (bigger blocks = lower per-transaction fees)

– Node operators maximize security and minimize costs (smaller blocks = easier to run nodes)

– Developers balance all concerns while avoiding network splits

Reaching consensus requires aligning these conflicting interests. BIP-110 couldn’t do it. The technical merits became secondary to political positioning and tribal identity.

This is Bitcoin’s fundamental paradox: The same decentralization that makes it censorship-resistant also makes it nearly impossible to upgrade. No one is in charge, which means no one can force necessary changes.

The Balance Between Evolution and Preservation

The BIP-110 controversy teaches us profound lessons about Bitcoin’s nature and future.

Bitcoin’s Conservatism as a Feature:

The network’s resistance to change isn’t a bug—it’s the core value proposition. Bitcoin functions as a form of digital bedrock precisely because it’s so difficult to modify. When you hold Bitcoin, you know with high confidence that the monetary policy won’t change, that supply won’t be inflated, that fundamental rules won’t be rewritten by developers or miners.

This extreme conservatism means Bitcoin moves slowly. Really slowly. Compared to Ethereum’s frequent upgrades or altcoins’ experimental features, Bitcoin seems almost frozen in time. But this stability is what allows Bitcoin to serve as a reliable store of value. You can’t be digital gold if your properties keep changing.

The Cost of Moving Too Fast :

Protocol changes that rush to deployment risk introducing vulnerabilities. Bitcoin processes hundreds of billions of dollars in value. A single critical bug could be catastrophic. The 2010 value overflow incident (when someone exploited a bug to create 184 billion bitcoins) demonstrates what’s at stake. Slow, cautious development with extensive peer review becomes mandatory when mistakes are this expensive.

Moving too fast also risks fragmenting consensus. If 60% of users adopt an upgrade but 40% refuse, you’ve created two separate networks. Both claim to be “Bitcoin,” but now the brand, liquidity, and network effects are diluted. The Bitcoin Cash split proved that hard forks are possible but painful.

The Cost of Moving Too Slow:

Yet moving too slowly carries its own risks. If Bitcoin can’t adapt to changing technological landscapes or user needs, it becomes obsolete. The fee crisis of 2017 demonstrated this danger: Bitcoin became temporarily unusable for small transactions, opening space for competing cryptocurrencies.

The Lightning Network—a second-layer solution—eventually addressed scaling without a protocol change. But it took years to develop and deploy. During that time, Bitcoin lost ground to payments-focused alternatives.

What BIP-110 Teaches Us:

The block size wars ultimately demonstrated that Bitcoin’s upgrade process works through exhaustion and attrition rather than efficient decision-making. Neither side “won”—instead, the community adopted SegWit (a compromise that increased capacity without hard-forking), built second-layer solutions, and the big-block faction split off into Bitcoin Cash.

This messy, contentious, years-long process might be exactly what Bitcoin needs. It ensures that only changes with overwhelming support get implemented. It forces developers to pursue solutions that don’t require hard forks. It creates strong incentives to maintain backward compatibility.

The Current Development Philosophy:

Post-BIP-110, Bitcoin development has embraced extreme caution:

– Preference for soft forks over hard forks whenever possible

– Extensive testing periods for any consensus changes

– Building on second layers (Lightning, sidechains) rather than modifying the base protocol

– High thresholds for activation to ensure broad consensus

The Taproot activation in 2021 showed this philosophy in action: a significant upgrade that took years of development, testing, and consensus-building before deployment.

The Verdict: Gridlock as a Feature

Bitcoin’s protocol update crisis—exemplified by BIP-110 and the block size wars—reveals an uncomfortable truth: Bitcoin’s governance is designed to be inefficient.

This isn’t a flaw to be fixed. It’s the central tradeoff that makes Bitcoin valuable. A system that can easily change is a system that can easily be captured. Bitcoin’s resistance to modification is precisely what allows it to function as a trustless, decentralized monetary network.

For Bitcoin holders and crypto enthusiasts, understanding this dynamic is crucial. When you hold BTC, you’re holding an asset whose fundamental properties are protected by institutional gridlock. Changes happen slowly, painfully, and only with overwhelming consensus. This makes Bitcoin boring in terms of technical innovation but reliable as a foundation for storing value.

The platforms where you trade and interact with Bitcoin—whether you’re buying your first satoshis on [Xbankang](https://xbankang.com) or running a full node—exist on top of this ultra-stable base layer. That stability has value. It’s why Bitcoin remains the most secure, most decentralized, and most trusted cryptocurrency despite being technologically surpassed by newer networks.

BIP-110 failed to activate. The block size war ended in compromise and schism. But Bitcoin survived—stronger because it proved that no single faction could force changes on the network. That’s not a bug. That’s the entire point.

Frequently Asked Questions

Q: What is a BIP in Bitcoin?

A: A BIP (Bitcoin Improvement Proposal) is a design document that describes a new feature, process, or change to the Bitcoin protocol. Anyone can write a BIP, but getting it accepted and activated requires achieving consensus among miners, node operators, developers, and users. The BIP process is similar to how internet standards (RFCs) are proposed, but Bitcoin’s decentralized nature makes implementation far more complex.

Q: What specifically did BIP-110 propose?

A: BIP-110 was one of several proposals during the 2015-2017 ‘block size wars’ that aimed to increase Bitcoin’s transaction capacity by raising the maximum block size limit beyond 1MB. The specific technical details varied across different versions, but all block size increase proposals sought to allow more transactions per block to reduce fees and confirmation times. The proposal became controversial because it required a hard fork and raised concerns about centralization.

Q: How do Bitcoin protocol updates get approved?

A: Bitcoin updates require consensus among multiple stakeholder groups: developers who write the code, miners who process transactions, node operators who enforce rules, and economic actors who assign value. Different activation mechanisms exist (miner signaling, user-activated soft forks, etc.), but all require broad agreement across these groups. There’s no central authority that can unilaterally approve changes. This makes upgrades slow and contentious but ensures no single party can control the network.

Q: Can Bitcoin’s fundamental rules be changed?

A: Technically yes, but practically it’s extremely difficult. Changing core parameters like the 21 million supply cap would require convincing nearly everyone in the ecosystem to adopt the change. Since Bitcoin’s value proposition depends on these fixed rules, any attempt to modify them would likely result in the non-adopters continuing the original chain while changers create a separate cryptocurrency. Bitcoin’s governance gridlock protects its fundamental properties from modification.