Analysis

BIP-110: The Bitcoin Debate That Matters for Institutional Investors

BIP-110: The Bitcoin Debate That Matters for Institutional Investors

July 21, 2026

Michael Saylor, Chairman of Strategy (NASDAQ:MSTR), just published 110 reasons to kill a Bitcoin proposal. If you hold Bitcoin on a balance sheet, the fight matters more than the proposal itself.

The proposal is BIP-110, the “Reduced Data Temporary Softfork.” On July 18, Saylor, founder of Strategy and the world’s largest corporate Bitcoin holder, published a 110-point rebuttal. His summary: “The proposed cure is more dangerous than the condition.”

Here’s why we’re watching, and why you should too.

What BIP-110 Actually Does

BIP-110 is a one-year temporary soft fork that restricts arbitrary data in Bitcoin transactions. Seven consensus rules cap output sizes, data pushes, and several Taproot features that inscription protocols use to embed images, text, and tokens on-chain. Existing coins are grandfathered. Nothing you hold today gets frozen. The full spec is in the Bitcoin BIPs repository.

The proposal comes from a pseudonymous developer, Dathon Ohm, and reached “Complete” specification status on June 25, 2026. Supporters see it as a defense of Bitcoin’s core purpose: sound money, not a data layer. Inscriptions burden node operators, inflate the chain, and raise fees for ordinary payments. Their fix is to reject data storage at the consensus level.

Reasonable people can hold that view. The problem is how BIP-110 tries to get there.

The Real Issue: 55%

Buried in the spec is the most consequential change. BIP-110 lowers the miner signaling threshold for activation to 55%. Bitcoin soft forks have historically required a 95% supermajority.

That’s not a technical detail. It’s a governance change. A 95% bar means consensus changes only happen when nearly everyone agrees. A 55% bar means a simple-ish majority can rewrite the rules for everyone else. Even if you hate inscriptions, that precedent should give you pause.

Saylor’s core argument follows from this. Bitcoin cannot read intent. The network sees bytes, not purposes. A witness payload that looks like spam today might be the foundation of a financial application tomorrow. Once consensus rules get used to invalidate currently valid, fee-paying transactions based on their content, Bitcoin’s neutrality is no longer a guarantee. It’s a policy preference that happened to survive the last vote.

His alternative: fight spam with fees, relay policy, and mining policy. Market mechanisms that preserve neutrality while still letting the community express preferences.

Where This Stands

BIP-110 has a real deployment schedule. A mandatory signaling window begins near block 961,632 in early August. Activation is projected for block 965,664, around September 1, 2026. The rules expire on their own about a year later.

It also has almost no support. Miner signaling sits under 1% as of mid-July. Even at the reduced 55% threshold, activation looks very unlikely. Opposition from Saylor, Adam Back, and much of the developer community has effectively sealed it.

One detail says everything about how Bitcoin governance actually works. The BIP editor who assigned the number, Mark “Murch” Erhardt, called it “a misguided and unusually careless softfork proposal.” He published it anyway, because it met the repository’s criteria. Anyone can propose. Nobody can impose. That’s the system functioning as designed.

The Sora Ventures View

Our thesis is Bitcoin as institutional balance-sheet infrastructure: a long-term reserve asset held by public companies across Asia. That thesis rests on predictability. Institutions holding Bitcoin are betting the rules stay stable and neutral over decades, not until the next contentious vote.

We take no position on whether inscriptions are valuable or wasteful. We do note that BIP-110 is the most significant Bitcoin governance dispute since SegWit, and that its likely failure is the reassuring part of the story. The network was asked to trade neutrality for tidiness at a discounted approval threshold, and it declined.

Two things to watch over the next few weeks. First, the August signaling window, which will formally settle BIP-110’s fate. Second, whatever comes next: successor proposals that address node costs and data storage without touching the activation threshold. Those will tell us whether this was a one-off or the start of a longer fight over who sets Bitcoin’s rules.

For institutional holders, that second question is the one that matters.

 

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About the Author
Chief Growth Officer & Operating PartnerSora Ventures

Mitty Chang is Chief Growth Officer and Operating Partner at Sora Ventures. He leads marketing, web engineering, and corporate strategy for the firm's publicly traded portfolio companies across Asia. Previously, he served as Senior Director of Web and Digital at Strategy (NASDAQ: MSTR) and has held fractional CMO and CTO roles across enterprise software, fintech, and digital media.

Areas of Expertise:BitcoinGrowth MarketingCorporate StrategyWeb Engineering