BIP-110 is dead. Not killed by a bug. Not by a competing proposal. It was simply ignored. The proposal—a soft fork that would restrict Bitcoin’s Coinbase transaction outputs—has been in draft limbo for years. It never reached mainnet. It never even got a serious debate. And that silence is more telling than any failed activation.
I’ve audited enough smart contracts to know that the most dangerous code is not the one that fails—it’s the one that never gets executed. BIP-110 is that ghost. A constraint on miner behavior, designed to enforce a specific output format for block rewards. A restrictive change, not expansionary. The opposite of SegWit or Taproot. It asked miners to give up flexibility. And they simply refused to consider it.
Context: The Liquidity of Governance
Bitcoin’s governance is not a democracy. It is a liquidity-weighted consensus. Miners, exchanges, and large holders vote with hash power and capital. BIP-110 was a proposal to modify the Coinbase transaction rules—specifically, the output structure of the block reward. The goal was to enforce a standardized format, potentially to prevent certain kinds of off-chain settlement or to simplify SPV verification. The details are still in BIP-110’s draft text, but the direction is clear: restrict miner discretion.
Compare this to SegWit (BIP-141). SegWit was a structural upgrade that increased block capacity and fixed transaction malleability. It offered tangible benefits to miners, users, and exchanges. Taproot gave privacy and smart contract flexibility. Both were “expansive” upgrades. BIP-110 is “restrictive.” It takes away a tool from miners. In a network where miners are the ultimate veto players, such a proposal never stood a chance.
Based on my experience in the 2017 ICO capital audit, I saw how quickly a “good” technical idea fails when it clashes with the incentive structure of the dominant stakeholders. Back then, it was a $15 million exploit waiting to happen. Here, it’s a governance ossification that prevents the network from self-correcting.
Core: The Code-First Autopsy
Let’s examine the technical reality. BIP-110, as described in the public draft, introduces a new rule for Coinbase transactions: the output script must be a specific format (likely a pay-to-witness-public-key-hash or similar). The proposal is a soft fork, meaning it restricts what was previously valid. Miners who don’t upgrade would produce blocks that are eventually rejected by upgraded nodes.
The security assumption is straightforward: enforce a standard output format to prevent miners from creating arbitrary outputs that could be used for off-chain settlement or hidden fee structures. But the implementation cost is high. Miners lose the ability to include any output they want in the Coinbase transaction. They can’t redirect block rewards to multiparty channels, or use complex scripts for payment distribution. The proposal effectively forces them to use a single, auditable address.
From a macro liquidity perspective, this is a move toward transparency. In 2020, during the DeFi liquidity cascade, I saw how opaque protocol structures amplified systemic risk. A standardized Coinbase output would make it easier to track miner flows, making it harder for large pools to hide sell pressure. But the market—the miners—rejected it. Why? Because transparency is a threat to the current power structure.
Hash power is already concentrated. Three pools control over 60% of Bitcoin’s hash rate. BIP-110 would expose their revenue streams, making it easier for regulators to target them. The proposal was not just technically restrictive; it was politically inconvenient.
Contrarian: The Decoupling Thesis That Wasn’t
The common narrative is that Bitcoin’s governance is robust because it requires broad social consensus. But BIP-110 reveals a darker truth: the network is captured by a small group of miners who resist any change that reduces their optionality. Decentralization is not about the number of nodes; it’s about the ability to change. When a proposal like BIP-110 cannot even get a formal vote, the network is ossifying.
2017 called. It wants its ICO hype back. Back then, everyone believed that code was law. But code is only law if the enforcers agree to enforce it. Miners are the enforcers. They voted with their silence. BIP-110 is a case study in how restrictive upgrades fail not because of technical flaws, but because of incentive misalignment.
Audits don’t lie. But they also don’t vote. The proposal’s technical soundness is irrelevant if the stakeholders don’t want it. This is the blind spot that macro watchers like me constantly flag: the market assumes that good technology will be adopted. It won’t. Only technology that aligns with the liquidity cycle gets adopted.
Takeaway: The 2026 AI-Chain Reality Check
We are now in 2026. AI agents are beginning to execute autonomous cross-border transactions. NeuroLedger and similar projects are building settlement layers that require auditable, standardized outputs. Bitcoin’s current Coinbase flexibility is a liability for these use cases. But don’t expect a BIP-110 revival. The network has already made its choice.
Instead, watch the three mining pools. As hash power concentrates further—after the fourth halving, miner revenue collapsed, forcing consolidation—the ability to pass any restrictive upgrade will approach zero. Bitcoin’s decentralization is hollow. It’s a governance oligarchy disguised as a protocol.
The real question is not whether BIP-110 will be resurrected. It’s whether the next generation of settlement layers will even bother with Bitcoin’s ossified consensus. My prediction: they will build on chains that can adapt. The macro liquidity cycle will flow to where governance is flexible. BIP-110 is a lesson. But it’s a lesson most will ignore until it’s too late.
Proven.