Bitcoin Splits Over Data Expansion: Decentralization Fears Intensify

Jimmy Song, a prominent Bitcoin (BTC) developer and advocate, has criticized the Bitcoin Core development team for what he describes as a "fiat" mentality following the removal of the 80-byte limit for non-monetary data on the Bitcoin blockchain in the upcoming Bitcoin Core 30 upgrade. The change, which allows transactions to embed larger volumes of non-financial data, has sparked significant debate within the Bitcoin community, with critics arguing it undermines the protocol's decentralization and opens the door to potential spam abuse.

The controversy centers on the OP_RETURN opcode, a feature in Bitcoin that enables the storage of small amounts of non-financial data, such as hashes or metadata, within transactions. For years, the 80-byte limit was seen as a safeguard against excessive data bloat, which could strain node operators and increase centralization risks. However, Bitcoin Core developers have argued that the limit is no longer effective, as users have found workarounds—such as private mining accelerators and alternative implementations—that bypass the restriction. The decision to remove the cap, outlined in a GitHub pull request, was approved despite vocal opposition from segments of the community.

Song accused the developers of dismissing community concerns and sidestepping the broader implications of the change. He stated, "The idea that spam is difficult to define, and because of this ambiguity, we shouldn’t be making any distinctions at all in the software, is a time-wasting argument from fiat politics where you pretend not to know the obvious, so the actual debate can never get off the ground—the non-monetary uses of Bitcoin are spam." Song emphasized that the debate over data storage on the blockchain is not merely technical but ideological, with critics fearing that allowing large data embeddings could prioritize corporate or speculative interests over Bitcoin's core financial utility.

The controversy has drawn comparisons to the 2015–2017 "block size wars," which led to a hard fork and the creation of Bitcoin Cash (BCH). In response to the recent upgrade, a significant portion of the Bitcoin community has migrated to Bitcoin Knots, an alternative node implementation that enforces strict data size limits. According to data from Coin Dance, Bitcoin Knots now accounts for approximately 20% of the network’s nodes, a sharp increase from 1% at the start of 2024. Proponents of Knots argue that maintaining strict data limits is essential to preserving Bitcoin’s decentralization, as the current blockchain size of ~680 gigabytes allows nodes to run on affordable hardware. In contrast, blockchains with higher data throughput require costly, specialized equipment, which could concentrate control among wealthy entities.

Bitcoin Core developers, however, defend the change as a necessary evolution. Gloria Zhao, a Bitcoin Core developer, stated the update aims to align the software with existing network practices and reduce harmful workarounds that compromise the unspent transaction output (UTXO) set. She noted that removing the cap simplifies transaction propagation and fee estimation while maintaining Bitcoin’s "minimal-rule philosophy," leaving the fee market to arbitrate block space demand. Critics, including developer Luke Dashjr, remain unconvinced, warning that the change could exacerbate centralization risks and urging users to adopt alternative node implementations.

The debate highlights broader tensions within Bitcoin’s governance model. While the update does not alter consensus rules or block size limits, it shifts responsibility to node operators and wallet developers to enforce stricter policies if needed. Zhao emphasized Bitcoin Core’s commitment to transparency and meritocracy, cautioning against external pressures influencing development decisions. Meanwhile, the inclusion of a developer-endorsed op-ed on the BitcoinCore.org homepage—supporting the removal of the OP_Return limit—has further polarized opinions, with some viewing it as a breach of neutrality.

As the Bitcoin Core 30 upgrade approaches, the outcome of this debate could have lasting implications for the network’s scalability, governance, and ideological direction. The community remains divided, with supporters of the change seeing it as a pragmatic step toward modernizing Bitcoin’s capabilities, while opponents fear it erodes the protocol’s foundational principles of decentralization and financial focus.