The debate over Bitcoin and looser data restrictions is reminiscent of the debate over serial numbers, which is causing controversy.
Sam Reynolds | Edited by Sheldon Rebeck April 30, 2025, 8:44 AM
Bitcoin developers are once again at odds over how the world’s oldest and largest blockchain should store information, with a proposal to loosen long-standing limits on the size of data that can be stored sparking a heated debate reminiscent of the ordinal conflicts of 2023.
The OP_RETURN function in the blockchain allows users to attach a small amount of additional data to a transaction. It is often used for notes, timestamps, or digital records. The proposed change, put forward by developer Peter Todd, would remove the 80-byte limit on such data, which was originally introduced to prevent spam and preserve the financial integrity of the blockchain.
Proponents argue that the current limit is meaningless because users are already getting around it by using Taproot transactions to obscure data inside the parts of a transaction that are intended for cryptographic signatures. This is how Ordinals and Inscriptions work (and why they have critics): they embed images or text into Taproot transactions that often can’t be spent, turning the Bitcoin blockchain into a sort of data storage system.
Bitcoin Core developer Luke Dashjr, a longtime critic of Ordinals, which he has long called a “spam attack” on the blockchain, described the proposal as “absolute madness” and warned that loosening data restrictions would, in his view, accelerate the degradation of Bitcoin’s financial purpose.
“This idea is obviously complete madness,” Dashjr wrote. “Mistakes need to be corrected, not abused.”
Critics of the proposal have other concerns, too. The change could normalize illegal content storage, worsen the fungibility of the chain, and turn node operators into unwitting breeding grounds for malware and copyright infringement.
To demonstrate the potential problems this could cause, one Ordinals team has written a full-fledged Nintendo 64 emulator onto the blockchain, which could attract the attention of Nintendo, a company known for protecting intellectual property.
Proponents of the change, including Peter Wuille and Sjors Provoost, have argued that relaxing the OP_RETURN restrictions could actually reduce so-called UTXO (unspent transaction output) bloat, a phenomenon that slows down a blockchain when the network is overloaded with non-financial transactions, as well as mempool fragmentation.
UTXO inflation is a fixed benefit
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