Bitcoin Core 30 Update to Increase OP_RETURN Data Limit by 50,000%

An upcoming Bitcoin software update, scheduled for October 30, will significantly increase the data limit on the OP_RETURN function. This change, part of the Bitcoin Core 30 update, will remove the current 80-byte limit and allow each output to carry up to 4 megabytes of data. This decision follows a statement signed by 31 Bitcoin Core developers on May 5, supporting the change known as merged pull request (MPR) #32406.

The OP_RETURN function has been a contentious issue within the Bitcoin community. It enables the storage of non-financial data on the blockchain, such as images, text, and documents. This functionality sparked the Ordinals craze last year, allowing users to post various types of data, including non-fungible token-like collections and historical documents like the Afghan war logs published by WikiLeaks in 2010.

However, the proposed change has drawn criticism from conservative members of the Bitcoin community. They argue that non-financial data clogs the blockchain with spam and believe the network should focus on peer-to-peer Bitcoin transactions. Crypto investment firm Reforge co-founder Alexander Lin expressed concern, stating that the data limit expansion is a “terrible mistake” and increases systemic risk to Bitcoin's core property as sound money.

On the other hand, some Bitcoiners, including Peter Todd, the lead author of the proposal, believe that increasing the data limit will expand Bitcoin’s use cases beyond finance. Bitcoin Core developer Gloria Zhao, in a GitHub statement, advocated for a more hands-off approach, allowing users to utilize the chain as they choose. Zhao stated that demanding Bitcoin Core prevent certain transactions from being mined reflects a misunderstanding of the relationship between open-source software users and developers.

Several Bitcoiners have voiced frustration over the data limit expansion. Satoshi Action Fund CEO Dennis Porter, who has raised over $200,000 for core developers, expressed that his faith in their work is now broken and that he will no longer support Bitcoin Core development. Jason Hughes, vice president of Bitcoin mining firm Ocean, hinted that he may walk away from the Bitcoin industry, stating that he is out of energy on this fight.

Since the introduction of MPR #32406 on April 28, Bitcoin Core’s dominance in the market share of Bitcoin nodes has fallen from around 98% to a little over 88%. The Bitcoin Knots client has gained almost all of that market share, now sitting at 11.48%. Bitcoin commentator Matthew R. Kratter suggested that the decision to raise the data limit could spell long-term trouble for Bitcoin Core, with its dominance potentially falling to the 20-30% range within the next one to three years.