Bitcoin Core Removes OP-Return Limit for Enhanced Data Inclusion

Bitcoin Core developers have made a significant decision to remove the limit on transaction data in the upcoming network upgrade. This change will allow for more data to be included in transactions in a more efficient manner. The announcement, made by Bitcoin developer Greg Sanders on GitHub, stated that the next release of Bitcoin Core will, by default, relay and mine transactions whose OP_RETURN outputs exceed 80 bytes, allowing for any number of these outputs.

The original limit, which was intended to signal that block space should be used sparingly for non-payment proof of publication data, has been deemed outdated. The proposal (PR 32359) was created by Bitcoin pioneer Peter Todd at the request of Chaincode Labs. OP_RETURN is a special type of Bitcoin transaction output that allows for the storage of small amounts of data on the blockchain, a feature that gained popularity during the ordinals inscriptions craze in early 2024. Unlike regular transaction outputs, OP_RETURN outputs are not spendable and do not bloat unspent transaction outputs (UTXOs).

Sanders noted that the original limit is no longer effective as people have found ways around it, such as using fake output addresses, which are actually worse for the network. Some mining services were already ignoring the limit, leading to more opaque forms of data inclusion that could cause damage to the network. The benefits of removing the limit include a cleaner UTXO set, more consistent behavior across the network, and better alignment with how Bitcoin is actually being used. Three possible paths were considered: keeping the cap, raising the cap, and removing the cap, with the latter ultimately decided upon after earning broad, though not unanimous, support.

This change has sparked controversy within the Bitcoin community. Bitcoiner Samson Mow expressed concerns on X, stating that many users find this change undesirable. He suggested that users can refuse to upgrade and stay on the previous version or run another implementation of the network. Critics also pointed out that the proposal was introduced without a proper consensus process. Marty Bent, managing partner of Ten31 Fund, stated that there is no consensus at the moment on this OP_RETURN issue. Some also raised concerns about deprioritizing Bitcoin’s financial utility and questioned potential conflicts of interest.

The Bitcoin Core development team has emphasized that the removal of the OP-Return limit will not compromise the security or decentralization of the Bitcoin network. They have stated that they will continue to prioritize the security and stability of the network, and that any changes to the protocol will be made with the utmost care and consideration. The team has also indicated that they will be working closely with the broader Bitcoin community to ensure that the removal of the limit is implemented in a way that is beneficial to all stakeholders.

The decision to remove the OP-Return limit is part of a broader effort by the Bitcoin Core development team to make the cryptocurrency more accessible and useful to a wider range of users. In recent years, there has been a growing interest in using Bitcoin for purposes beyond simple transactions, such as smart contracts, decentralized finance, and other innovative applications. The removal of the OP-Return limit is seen as a way to facilitate these new use cases and to encourage more developers to build on top of the Bitcoin blockchain.