BIP-110 — a Bitcoin Improvement Proposal for a network-wide soft fork — is approaching its first consequential activation boundary. The proposal enters mandatory signaling at block 961,632, currently projected around August 9, 2026. It locks in no later than block 963,648, roughly in late August, and activates its new transaction rules at block 965,664, currently projected for early September. BIP-110 uses a 55% signaling threshold and would enforce its restrictions for 52,416 blocks — approximately one year.

Bitcoin resolves consensus changes through coordination among miners, users, and nodes (note that anyone can be any combination of these three roles). Miners choose which valid chain to extend. Users decide which chain's coins, deposits, and payments they recognize. Nodes independently choose which rules they enforce. Durable consensus emerges whenever these groups converge on the same chain. This coordination model has been tested through prior soft fork activations, each requiring the ecosystem to align around a shared rule set before new rules take effect.

BIP-110 restricts large data pushes, oversized output scripts, undefined witness versions, Taproot annexes, deep Taproot control blocks, OP_SUCCESS opcodes, and certain Tapscript conditionals. These features were introduced or expanded by Bitcoin's SegWit and Taproot upgrades, enabling more expressive scripting and greater data-carrying capacity in transactions. BIP-110 grandfathers UTXOs created before activation, while standard monetary uses remain compatible with its rules.

Minimal Action Required for Most Corporations

For most corporations, BIP-110 requires no action. The typical corporate Bitcoin utility today is as a store of value — a long-duration treasury reserve asset. This use case is essentially unaffected by the transaction features targeted by BIP-110.

Corporations using Bitcoin for payments also face limited direct impact. Standard on-chain payments remain compatible (see specifics below), while ordinary Lightning payments occur off-chain. A chain split can still affect Lightning channel monitoring, force-close behavior, and the chain source that a Lightning node treats as authoritative. However, even corporations using Bitcoin for payments normally rely on a third-party provider like Square, so these concerns are abstracted away to a non-issue.

A corporation that runs its own full node has a direct choice. Every user retains the right to run the Bitcoin implementation that matches its needs. A corporation that supports BIP-110 should therefore switch to running BIP-110. All other node-running corporations can simply do nothing.

A BIP-110 node enforces tighter rules. During mandatory signaling, it rejects blocks that fail to signal bit 4. After activation, it also rejects blocks containing transactions that violate BIP-110. A non-BIP-110 node accepts both BIP-110-compliant blocks and blocks that remain valid under the existing rules. Among all chains valid under its own rules, a node follows the branch with the greatest accumulated proof of work.

The key factor to be aware of, therefore, is a potential chain split. When miners build a chain that is not compliant with the BIP, BIP-110 nodes can separate from the broader network. Non-BIP-110 nodes may continue following the higher-work branch, while BIP-110 nodes could remain on a compliant branch with less accumulated work.

Corporations Dealing with Chain Splits

Mining companies face the highest immediate economic exposure. Electricity and machine time are sunk costs. A miner should select the branch it expects other miners, nodes, and users to recognize and mine on it. Alternatively, a miner may stop mining and wait for the chain split to resolve. If BIP-110 and non-BIP-110 chains develop independently, miners must track chainwork, signaling, validity under both rule sets, their own mining pool's stance, and the market value assigned to each branch.

Corporations operating exchanges and institutional custody should prepare for settlement uncertainty. During an extended split, the ordinary six-confirmation standard loses much of its value because each branch can independently show six confirmations. Operators should monitor both branches, raise confirmation requirements, pause large deposits or withdrawals when risk rises, and delay final settlement until one branch has decisively accumulated more work or the transaction has sufficient depth on all viable branches. Different validation rules can produce chain splits, false confirmations, and double-spend risk.

Consider a chain split occurring at block height S. Suppose a deposit appears on Chain A at S+4 and on Chain B at S+6. Once both chains reach S+12, the deposit has substantial depth on each branch (assuming the standard six-confirmation threshold). However, this number of six confirmations should change depending on the work on each branch, and the desired number of confirmations may differ for each branch. The main point is that the operator must wait until both branches reach the requisite confirmations. At that point, the operator can be confident that the transaction will persist, regardless of which branch becomes canonical.

If the transaction appears on only one branch, the operator should wait for that branch to win or apply chain-specific accounting. This would be the only way to ensure no double spending occurs. In practice, monetary transactions should always eventually appear on both branches, since the BIP-110 chain does not prohibit monetary transactions.

Conclusion

The primary consideration is a potential chain split. If no split occurs, there is nothing that needs to be done differently. Even with a chain split, BIP-110 will not create insurmountable disruptions.

For corporations that may be impacted by a chain split, the main action is to lengthen confirmation times and monitor both branches. For node-running corporations that support the BIP, the main action is to begin running it on their nodes, if they have not already.

Miners, as usual, should direct their hashrate based on their assessment of which branch will ultimately accumulate the most proof of work. Exchanges and custodians should lengthen settlement procedures and maintain visibility into both chains should a chain split occur. For the daily operations of most corporate Bitcoin users, BIP-110 changes very little — if it changes anything at all.

Disclaimer: This content was prepared on behalf of Bitcoin For Corporations for informational purposes only. It reflects the author's own analysis and opinion and should not be relied upon as investment advice. Nothing in this article constitutes an offer, invitation, or solicitation to purchase, sell, or subscribe for any security or financial product.

This article first appeared on Bitcoin Magazine and was written by Allard Peng. The original post is available at Bitcoin Magazine.