Bitcoin Core Set to Increase OP_RETURN Data Limit, Igniting Controversy

Upcoming Bitcoin Core 30 software, scheduled for release on October 30, will remove the 80-byte data limit on the OP_RETURN function, enabling transactions to embed up to 4 megabytes of non-transactional information directly onto the blockchain, according to developer Gloria Zhao’s elaborate statement posted to GitHub.

The update follows a statement signed by 31 Bitcoin Core developers supporting Merger Pull Request (MPR) #32406, the designation for this expansion. Development team indications had previously suggested the data constraint would be lifted.

OP_RETURN played a central role in the Ordinals protocol phenomenon earlier this year. Users harnessed it to record diverse data on Bitcoin, ranging from token-like collections to archival data like the 2010 Afghan War Logs published by WikiLeaks.

This change, however, incites fury among conservative Bitcoin advocates who argue that embedding non-financial data is clogging the blockchain with spam and deviating improperly from Bitcoin’s core purpose of peer-to-peer value transfer.

Alexander Lin, co-founder of crypto investment firm Reforge, characterized the expansion as a “terrible mistake” on X (formerly Twitter), citing increased “systemic risk to btc’s core property as sound money.”

Illustrative portrait of Bitcoin Core developer Gloria Zhao — *Source: Jimmy Song (Image Context Note: Image source unrelated to Zhao)*

Conversely, proponents like Peter Todd, a lead author of the proposal, believe raising the limit broadens Bitcoin’s utility beyond traditional finance. Zhao, championing a user-centric approach, emphasized core developers should not dictate transaction purposes.

“Demanding that Bitcoin Core prevent certain transactions reflects a misunderstanding…”

“Demanding that Bitcoin Core prevent certain transactions from being mined reflects a misunderstanding of the relationship between open source software users and developers.” – Gloria Zhao, Bitcoin Core Developer

Faith in Bitcoin Core Development Fractured

The decision prompted dismay among node operators. Dennis Porter, CEO of Satoshi Action Fund, confessed on X, “My faith in their [Bitcoin Core devs] work is now broken,” following years of crowdfunding their efforts. He announced cessation of Bitcoin Core support.

Jason Hughes, vice president of Bitcoin miner Ocean, suggested potential industry withdrawal: “Personally, I’m out of energy on this fight” regarding the data issue.

Since Peter Todd introduced MPR #32406 on April 28th, Bitcoin Core node dominance has dwindled, falling from approximately 98% market share to 88%, according to cryptocurrency data provider coin.dance.

Alternative client Bitcoin Knots has reportedly captured nearly all of the lost market share, settling at 11.48%.

Bold predictions suggest Bitcoin Core’s dominance could plummet further into the 20-30% range within a few years, should the current push against core development persist, raising strategic questions for the future.

Analysis chart of Bitcoin node market share — *Source: Matthew R. Kratter (Image Context Note: Chart source unrelated to Zhao)*

The OP_RETURN data limit expansion amplifies the underlying tension within Bitcoin’s governance and ideological divides, weighing potential utility against a strict focus on financial transactions and scalability.