Bitcoin's BIP-110 Episode Is Free-Market Capitalism in Purest Form
Key Takeaways
- •BIP-110 aimed to limit non-financial data on Bitcoin to reduce congestion and free up block space.
- •The proposal did not win broad support and was effectively rejected through distributed consensus across the network.
- •Backers launched a fork at block 961,632, but it attracted little hashpower and stopped after producing only two blocks.
- •The original Bitcoin network kept running normally and retained nearly all activity, liquidity, and security.
- •Bitcoin was trading near $65,000, and upcoming U.S. inflation data is expected to affect price direction.
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Whether bitcoin (BTC, $64,193.70) works better as a store of value or a payments mechanism remains open to debate. What is beyond dispute, however, is one of its core appeals: a radically free-market, permissionless design. The BIP-110 saga put that design on full display.
The BIP-110 Proposal and Distributed Consensus
Bitcoin Improvement Proposal (BIP)-110 originated as an effort to limit non-financial data — such as Ordinals inscriptions, which some viewed as spam — in order to free up blockchain space. Ordinals, launched in early 2023, leveraged Bitcoin's 2021 Taproot upgrade to embed data on individual satoshis, creating an NFT-like ecosystem that at times drove transaction fees sharply higher. The proposal reflected a recurring tension in Bitcoin's history — the block size wars of 2015–2017 similarly pitted those prioritizing transaction capacity against those prioritizing a constrained, predictable block space.
The developer community debated the proposal in an open forum, but it failed to secure broad support and was effectively denied through distributed consensus. The critical distinction here is that no regulator or central committee banned it; the network's participants made the decision collectively.
The free-market dynamic extended further. Supporters of the proposal exercised their right to create their own blockchain, forked or split from the original Bitcoin. They did so at block 961,632, attempting to implement their preferred rules in a newer version — a voluntary move not forced by any regulator or intermediary.
Miners quickly gravitated toward the more profitable chain, the original Bitcoin. The new fork inherited Bitcoin's massive mining difficulty but attracted only a tiny fraction of hashpower, producing just two blocks before grinding to a halt. Previous Bitcoin forks — Bitcoin Cash in 2017 and Bitcoin SV in 2018 — survived but operated with a fraction of the original chain's hashpower, liquidity, and market value. The BIP-110 fork's near-immediate collapse underscores how much stronger those network effects have become in the years since. Meanwhile, the original Bitcoin network continued operating without interruption, retaining virtually all activity, liquidity, and security.
"Bitcoin worked exactly as designed," Michael Saylor, founder of BTC-holding company Strategy (MSTR), said on X.
A Contrast with Traditional Economies
The episode stands in stark contrast to the so-called free-market economies of the world. When corporate profitability falls, market principles would dictate cost-cutting and layoffs, yet electoral politics often leads governments to block that adjustment, resulting in prolonged industrial stagnation. Similarly, when high inflation strikes, governments frequently issue subsidies that artificially prop up demand, fueling even higher inflation. The natural free-market response of reduced consumption and price discipline never gets a chance to play out.
Bitcoin's takeaway for the real economy is clear: free markets work when allowed to run their course.
Spot Price and Upcoming Data
As for the coin's spot price, bitcoin continues to trade near $65,000 alongside sustained demand for downside protection. This week's U.S. inflation data is expected to influence the price trajectory.
Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead."
What's Trending
A rare CME shift: Hedge funds abandon structural shorts to bet on a bitcoin rally (CoinDesk): Hedge funds trading bitcoin futures on the CME turned net long. The rare positioning shift suggests professional traders are increasingly betting on bitcoin prices rising.
XRP is getting left behind in the crypto bounce even as ETFs keep attracting investor money (CoinDesk): XRP dropped about 5% to $1.03 last week, even as bitcoin, ether, and solana each rose. The underperformance is puzzling because XRP exchange-traded funds attracted net investor capital for a fourth consecutive week.
Global stocks tick up with oil steady on Hormuz plans (Reuters): Global equities inched higher as oil prices held broadly steady after Iran said a final pact with Oman was near for shipping through the Strait of Hormuz.
Today's Signal
The chart displays bitcoin's price movements in candlestick format with the Ichimoku Cloud indicator overlaid.
BTC currently remains inside the Ichimoku Cloud, a classic sign of consolidation. The cloud (Kumo) typically acts as dynamic support when the price is above it and resistance when below. Once the price moves into the cloud, that zone becomes an equilibrium band where buyers and sellers are roughly balanced and the trend is neutral.
In practice, traders interpret crossovers and closes above the cloud as bullish signals and those below as bearish, while price action inside the cloud is often considered "no-trade" or range-bound territory until a clear breakout occurs.
The indicator was created in the late 1960s by Goichi Hosoda, a Japanese journalist and technical analyst.
Top Headlines
- Bitcoin stuck below $65,000 as Hormuz hopes evaporate, XRP close to dropping below $1 — 5 min ago
- Live updates: Bitcoin slips as corporate BTC enthusiasm moves to AI — 18 min ago
- FlightAware sues Kalshi over bets on flight cancellations — 19 min ago
- Software stocks break away from bitcoin: What the rare divergence means for crypto — 22 min ago
- Luke Dashjr removed as Bitcoin BIP editor after controversial BIP-110 fork stalls — 25 min ago
- Nvidia's $500 billion AI infrastructure push leaves crypto compute further behind — 43 min ago
- UK lawmakers question lenders over lack of banking for the country's crypto firms — 47 min ago
- Riot Platforms surges 20% in pre-market trading on $9.1 billion Anthropic deal — 1 hr ago
- A $2 trillion asset class is getting a new blockchain rail — 3 hrs ago
- BTCPay offers $190,000 bounty after bitcoin payment servers drained in exploit — 4 hrs ago
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