Bitcoin devs clash over adding ‘existential’ filtering feature to $2.2tn network

A holy war over Bitcoin’s immutable code just went ballistic.

Over the weekend, a pseudonymous developer proposed a Bitcoin soft fork that would permanently ban most data storage at the protocol level.

The proposal includes a new feature that would trigger whenever miners encounter illegal content, potentially causing blockchain reorganisations.

Moreover, leaked messages show Luke Dashjr, a longtime Bitcoin developer, discussing the fork plan due to legal concerns about node operators hosting data. Those messages were first published by industry outlet The Rage.

The words “legal” and “law” appear more than 10 times in the proposal’s motivation section, leading critics like Jameson Lopp to call it “legal coercion.”

The fork proposal escalates a fight that’s been brewing for months over an update to Bitcoin Core, the network’s largest client, which raised the limit on how much data can be registered on the blockchain.

What started as a technical debate over an 80-byte data limit is now threatening to split Bitcoin’s $2.2 trillion blockchain.

‘The debate is existential to Bitcoin.’

—   Lukas Duczko, CEO of Blink Wallet

80-byte limit

At the centre of the storm is an update to the network’s largest client, called Core, which raised the limit on how much data can be registered on the blockchain.

Proponents of increasing the limit argue that the existing 80-byte ceiling backfires.

Instead of preventing data storage, it pushes users to disguise arbitrary data as Bitcoin addresses — permanently bloating the database that every node must maintain. Allowing larger limits would let users store data without clogging the system.

The change could also throw a lifeline to struggling Bitcoin miners who have watched their transaction fees plummet to existential levels.

But increasing the limit, allege critics, will turn Bitcoin’s ledger into a cesspool of child porn and racy content because the change makes it much easier to store any kind of data onto the blockchain.

“Even if we had a magic wand to make the legal risk disappear, turning Bitcoin into a CSAM-friendly file sharing network would still be fatal,” Dashjr wrote on X, referring to child sexual abuse material.

“No decent human being would willingly run such a network.”

The battle pits advocates of Bitcoin Core — the dominant software implementation that seeks to increase the data limit — against Bitcoin Knots, an alternative largely maintained by Dashjr that enforces stricter rules against using the blockchain for anything other than money.

Both implementations follow the same consensus rules, meaning they recognise the same valid blocks and transactions.

The difference comes down to what should and shouldn’t be allowed on the blockchain.

It’s a difference, some say, of life or death for the network.

“The debate is existential to Bitcoin,” Lukas Duczko, CEO of Blink Wallet, told DL News.

“It is about how to define the roadmap and who should define it.”

OP_RETURN

At the centre of the debate is a key feature of the network called OP_RETURN, which Core developers introduced in 2014.

At that time, users were already storing arbitrary data on the blockchain by encoding it into fake Bitcoin addresses. Users were doing this because they believed in Bitcoin as a decentralised database for all things digital — not just money.

These transactions created Bitcoin which can never be spent but only serve to clog up the network of all coins that every node keeps a record of.

As the network became more congested, storage prices rose and transaction speeds slowed.

OP_RETURN provided an alternative. The opcode is a special type of transaction explicitly designed for storing small amounts of data.

Bitcoin Core set an 80-byte limit on these outputs to discourage large-scale data storage while providing a release valve for legitimate use cases like time-stamping documents.

More than a decade later, the opcode is now being relitigated.

Knots camp

Critics of raising the byte limit are furious.

Dashjr, who maintains Bitcoin Knots — the leading alternative client implementation with stricter filtering rules — has galloped forward as Core’s most vocal opponent.

Approximately 5,177 nodes are now running Bitcoin Knots, according to data from Coin Dance. That translates to 21% of all public nodes, a staggering fourfold increase from the 5% it began at this year.

To Dashjr, making it easier to store arbitrary data on Bitcoin undermines its primary purpose as money.

He did not reply to a request for comment from DL News.

The Knots faction worries that removing the limit signals to spammers that they’re welcome on Bitcoin. Because blockspace is limited, using it for storage could fill blocks quickly, driving up transaction fees to the point where sending money back and forth suddenly becomes too expensive.

That argument is gaining traction.

Justin Bechler, a Bitcoin Core user turned Knots evangelist, is candid about his opposition to increasing the limit.

“A small centralised body of young, naive economically illiterate developers paid by crypto VCs is trying to repurpose Bitcoin before it ever achieves its purpose as money,” Bechler told DL News.

Another concern is that raising the limit means it takes less effort to turn data into an image. This, according to Knots proponents, increases the risk that illicit materials like child porn could be stored on the blockchain, potentially exposing node operators to regulatory pressure or even legal liability.

For Knots, the only way to dissuade users from storing crude content on Bitcoin is to establish filters — rules that determine which transactions are broadcast to the rest of the network. The goal isn’t perfect enforcement but rather discouragement.

For all the handwringing, Bitcoin Core continues to dominate with roughly 18,952 nodes, or around 78% of the network.

Still, the swift exodus to alternative clients signals deep discontent among node operators who believe Core developers have veered off course.

Core developers argue they’re preventing worse outcomes by channelling unavoidable behaviour into less harmful forms.

But to Knots supporters, that sounds like surrender — accepting that Bitcoin will become a data storage platform rather than fighting to keep it focused on money.

Grim for miners

Raising the limit does have positive consequences, especially for one sector of the Bitcoin ecosystem that has been struggling to gain momentum.

For months now, Bitcoin miners — the specialised computers that dedicate themselves to securing the network — have been watching their revenue plummet as transaction fees dwindle.

This presents a fundamental problem.

After the Bitcoin halving chopped their primary source of revenue in half — and will continue to do so because of Bitcoin’s programmed monetary policy — miners will be increasingly dependent on transaction fees.

Fees have been plummeting to historic lows.

Notably, Bitcoin miners are largely uninterested in the debate.

“I don’t think any of my mining group chats have even mentioned [the] debate,” Nick Hansen, CEO of mining outlet Luxor, told DL News. “I would consider it highly irrelevant.”

The disconnect is telling: while developers wage philosophical war over Bitcoin’s identity, miners are focused on immediate survival — one that seems not to depend on the debate at all.

The fight continues

The proposal was merged into Core’s latest update, v30.

But the debate grinds on, both on Twitter and in GitHub comment threads that stretch into infinity.

Until this weekend, this didn’t threaten to split the chain or trigger the birth of a new cryptocurrency, as during the Blocksize War.

Now, the consensus layer’s current state looms ominously.

And with more than one in five nodes now running Knots — a number that keeps climbing — the fight continues to reshape Bitcoin’s development landscape.

Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got a tip? Email him at psolimano@dlnews.com.