Why BIP-110 Could End Bitcoin As Money

0:00There's a war being fought over Bitcoin

0:01right now. Not a price war or a

0:03regulatory war, but a war over what

0:05Bitcoin is even allowed to be. And in

0:07about 36 days, this comes to a head in a

0:10way that could either be a complete

0:11non-event that the market shrugs off, or

0:14the most important thing that's happened

0:15to Bitcoin in a decade, and potentially

0:18the thing that kills it. Both outcomes

0:20are on the table, and almost nobody

0:22outside of a small circle of developers

0:24understands what's actually at stake.

0:26So, here's a question that a lot of

0:28smart people have asked for years. What

0:29is the single best way to kill Bitcoin?

0:32Not slow it down, not dent the price,

0:34but kill it. And the answer isn't a

0:36government ban, and it's not a hack,

0:38because the network is too strong, too

0:40spread out, and too valuable for either

0:42one of those to work. The only way to

0:44kill Bitcoin is from the inside. And

0:46that is exactly what this war is

0:48testing.

0:49So, here's the paradox. The most

0:51valuable, most secure, most

0:53institutionally backed monetary network

0:55ever created, a $1.1 trillion asset held

0:57by BlackRock, by Fidelity, by public

0:59companies, by the United States

1:01government itself, is being threatened.

1:03And it's not being threatened by a

1:05government ban or a hack, it's being

1:07threatened from the inside, by its own

1:09community over a fight about whether

1:11Bitcoin is money or whether Bitcoin is a

1:13hard drive. This is the war for the soul

1:16of Bitcoin. One side says that Bitcoin

1:18exists to store value, and the other

1:20side has been quietly using it to store

1:23data, images, text, files. And a

1:25proposal called BIP 110 is the first

1:29serious attempt to end that fight by

1:30force, on a deadline, whether the whole

1:33network agrees or not. So, in this

1:35video, I'm going to show you exactly

1:37what this war is, who's fighting it, and

1:39why it matters to every single person

1:40who owns Bitcoin. I'm going to show you

1:42the specific mechanism that could split

1:44Bitcoin into two competing chains in a

1:46little over a month, and the factors

1:48that decide which one survives. And most

1:50importantly, I'm going to show you why,

1:52when you zoom all the way out, this is

1:54either how Bitcoin dies, or the best

1:56proof yet that nothing can kill it.

1:59Let's get into it. So, to understand

2:00this war, you have to understand that

2:02Bitcoin has no CEO. There's no company,

2:04there's no board, so who actually

2:06decides the rules? Well, the answer is

2:09that power in Bitcoin is split across

2:11five groups, and this is the anchor that

2:13I want you to hold on to for the entire

2:15video because everything that happens

2:16over the next month comes back to these

2:18five. We have the users, so the people

2:20who hold and transact, the nodes, so the

2:23computers that enforce the rules, we

2:24have the miners who produce the blocks

2:26and actually issue the Bitcoin, we have

2:28the developers who write the software,

2:29and the businesses, so the exchangers

2:31and custodians that move the economic

2:33weight. Five pillars, no single one is

2:36in charge, and the entire security of

2:38Bitcoin rests on the fact that to change

2:40Bitcoin, you need those five pillars to

2:43agree. So, remember the five pillars,

2:45we're coming back to them throughout the

2:46video. Now, here is what started the

2:48fight. Buried inside Bitcoin, there's a

2:50feature called op return. Stay with me

2:53here. And for years, it carried an

2:5580-byte limit, which is about the size

2:57of a single YouTube comment. It was

2:59designed to let you attach a tiny piece

3:01of data to a transaction. Totally

3:03harmless, very small, but starting in

3:052022, with something called

3:07inscriptions, people figured out how to

3:09use these small data fields to embed

3:12much bigger things. Images, even video.

3:15People started etching JPEGs into

3:17Bitcoin blocks. So, we had this 80-byte

3:19limit, and suddenly when you remove it,

3:21you can jam 4 MB of arbitrary data into

3:24transactions. From 80 bytes to 4 MB.

3:28Suddenly, you had NFTs on Bitcoin,

3:30tokens on Bitcoin, and here's the key

3:32tension. Every one of those files has to

3:34be stored forever by every node operator

3:37on Earth. Remember pillar number two?

3:39These are the people that run the

3:41computers. The person who posted pays a

3:43one-time fee, but everyone running the

3:46network and keeping it secure has to pay

3:48to store it forever. So, one camp looks

3:51at that and says, "This is fine. This is

3:53a free market. If you pay the fee, your

3:55data is valid. End of story." That's the

3:57position that Bitcoin Core, which is the

4:00dominant software, has effectively

4:02taken. And the other camp looks at it

4:04and says, "Absolutely not. Bitcoin is

4:06money. It's not the world's most

4:08expensive Dropbox or Google Drive. And

4:10if we let it become a data storage

4:12platform, we bloat the network, we drive

4:14up fees for actual payments, and we push

4:16ordinary people out of actually running

4:18their own copy of Bitcoin." Which is the

4:20entire thing that keeps Bitcoin

4:21decentralized in the first place. That

4:23second camp is where BIP 110 comes from.

4:27And real quick, before you go deeper, I

4:28want you to do something. If you are pro

4:30BIP 110, if you think Bitcoin should be

4:32money and only money, comment the word

4:34money below. But if you're against it,

4:36if you think users should be free to do

4:38whatever they pay for, comment the word

4:40freedom. One word, I read every single

4:42comment, and I want to see where you

4:43guys actually stand before the end of

4:45the video. Money or freedom. Now, let's

4:47get into what BIP 110 actually does. So,

4:50BIP 110 is what's called a temporary

4:52soft fork. And its job is simple. It

4:55restores that strict 83-byte limit onto

4:58OP_RETURN, the one that I mentioned a

4:59moment ago. It caps arbitrary data at

5:02256 bytes. So, said differently, it

5:05shuts down all of the little tricks that

5:07people use to inject images and files,

5:09and critically, it's designed to expire

5:11on its own after just 1 year. It's not a

5:14permanent change for Bitcoin. It's just

5:16a 1-year statement that says, "Arbitrary

5:19data storage is not a supported use of

5:21Bitcoin." Full stop. Bitcoin is money

5:23and it's a store of value, but it stores

5:25monetary value, and that's that. And

5:27here's where you need to understand what

5:28a soft fork even is, because the

5:30mechanism is everything. A soft fork is

5:33essentially a backwards-compatible

5:35upgrade. So, it adds stricter rules, not

5:38looser rules. Old nodes, so those

5:40computers that validate the Bitcoin

5:41rules, will still see the new Bitcoin

5:43blocks as valid, which normally means

5:46the whole network moves together and

5:47nothing splits. That's how past Bitcoin

5:50soft forks have been activated without

5:51issue, such as SegWit in 2017 and

5:54Taproot in 2021. And if you don't know

5:56what those are, that's fine, but

5:57basically those are upgrades that had

5:59overwhelming agreement. They required

6:01around 95% of miners to signal support

6:04in order to go into effect and they had

6:05that. But BIP 110 doesn't play by those

6:08rules. And this is the part that's

6:09extremely important to you if you own

6:11any Bitcoin. Instead of needing 95% of

6:15Bitcoin miners to approve, BIP 110 is

6:17slated to activate with just 55% of

6:20miners. And if it doesn't even hit 55%,

6:22it's coded to force what's called a

6:24mandatory signaling starting at a

6:26specific block, block 961632.

6:29And as of today, we are sitting at block

6:31956400.

6:33So, it's about 36 days away, not months,

6:36days. So, let me plant a number here

6:39that I'll come back to because it's the

6:41whole story. How much miner support does

6:43BIP 110 actually have right now? Well,

6:46it doesn't have 55%, not 20%, not even

6:485% as of this week. Miner signaling is

6:52sitting at around 0.3% of the network's

6:54hash power, around 5 exahash out of

6:57roughly 940 exahash total. So, barely

7:00any miners are supporting this thing.

7:02Some trackers are even showing it at

7:03literally zero over the last day. So,

7:06hold that number, just 0.3% in your head

7:08cuz it's going to matter a lot in just a

7:10few minutes. Now, let's zoom out here

7:12because there's a lot of technical mumbo

7:14jumbo and I want to get into how this

7:15matters to you because this is where it

7:17stops being about bytes and starts being

7:19about the soul of the asset. This exact

7:22fight has actually happened before. If

7:24we go back through history, all the way

7:26back to 2017, Bitcoin fought the first

7:29war for its soul. People called it the

7:31block size wars. And you had the same

7:33structure, but the rules were reversed.

7:35Back then, one camp wanted to make

7:37blocks bigger so that Bitcoin could be a

7:39high volume payments currency. And the

7:40other camp wanted to keep blocks small

7:43so that regular people could always

7:44afford to run a node and nobody could

7:46capture the network. And the small block

7:48side won. And the reason they won is the

7:50single most important idea in all of

7:52Bitcoin. They kept it decentralized

7:54enough that no company, no government,

7:57and no central entity of any kind could

8:00control it or change the rules. That

8:02decision to stay small, to stay

8:04something that a person could run on a

8:05cheap computer in their bedroom, is the

8:07entire reason Bitcoin is now worth over

8:09a trillion dollars today instead of

8:11being a forgotten experiment. And that's

8:13the anchor that I called to in the

8:15beginning coming back. You have five

8:16pillars of power in Bitcoin. The whole

8:192017 war was about which pillar gets to

8:21decide. The developers proposed, the

8:23miners had the hash power, but

8:25ultimately it was the users and the

8:27economic nodes, those computers, who

8:29ultimately said no and won. Miners found

8:32out that they had to work for the

8:34network, not the other way around. And

8:35that's the answer to the question that I

8:37opened with. The 2017 war was the first

8:39time someone tried to change Bitcoin

8:40from the inside, and the inside held.

8:43Which brings us to the real question

8:45over the next month. If only 0.3% of

8:47miners support this thing, isn't it just

8:49dead? And this is the counterintuitive

8:51part that almost everyone gets wrong.

8:53Because of how soft forks work, a tiny

8:56minority can still force the issue.

8:58Here's the game theory here, and it's

8:59beautiful and terrifying at the same

9:01time. Think of it like two lifeboats

9:03leaving a sinking ship. One boat is BIP

9:05110, everyone on it enforcing the new

9:07rules, and the other boat is ignoring it

9:10and rowing off like nothing has changed.

9:12Now, if you're a mining pool, here's

9:13your problem. If enough people get in

9:15the BIP 110 boat and start enforcing the

9:17new rules and their chain ever gets

9:19longer than yours, your blocks, so all

9:22of the work you did, all of the

9:23transactions that you logged, everything

9:24you mined, gets wiped out, erased. You

9:27didn't get paid. Your boat sinks. But if

9:30you get in the BIP 110 boat along with

9:32everyone else, you're guaranteed to stay

9:34afloat no matter what. So, what's the

9:36rational move? You get in that boat. And

9:38if you think the other pools might get

9:40in it, you have to get in first to

9:42protect yourself. And they're thinking

9:43the exact same thing about you. That's

9:45what's called a prisoner's dilemma. And

9:47the way that the prisoner's dilemma

9:49resolves, when the cost of being wrong

9:51is your entire revenue getting deleted,

9:53is that everyone rushes to the safe

9:55choice at the last possible second,

9:57which is why the people who understand

9:59this expect that if it activates at all,

10:02it happens in a flash right when

10:04mandatory signaling begins in 36 days.

10:07Not because miners believe in it, but

10:08because none of them can afford to be

10:10the one left on the losing chain. And by

10:12the way, real quick, if you're getting

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10:45lock in their pricing for life. Now,

10:47back to the war. So, we've got the

10:49mechanism, we've got the game theory.

10:51Now, let's talk about what actually

10:52happens to you, the person holding

10:54Bitcoin, if this happens. Because there

10:56are two scenarios, and you need to

10:58understand them both. Scenario one is

11:01the clean one, the easy one to

11:02understand. Signaling stays near zero,

11:04the headline arrives, and either a small

11:06group of node runners fork off onto

11:08their own minority chain that the market

11:10ignores, or the whole thing quietly

11:11fizzles, and Bitcoin keeps moving

11:13exactly as it does today. In that world,

11:15this is a non-event for Bitcoin's price.

11:18Nothing happens, it's a footnote. But,

11:20scenario number two is a messy one, and

11:23that's a chain split. If BIP 110 nodes

11:26start enforcing, while the rest of the

11:27network doesn't, all of a sudden, you

11:30get two versions of Bitcoin, two

11:32ledgers. And if that split becomes

11:34permanent, here's what it means for you

11:36directly. Every Bitcoin that you hold

11:39gets duplicated. One Bitcoin becomes one

11:41coin on each chain. And then a brutal

11:44fight breaks out over which one gets to

11:46keep the name Bitcoin and the BTC

11:48ticker. The market splits its value

11:50between them and one chain becomes the

11:52real Bitcoin while the other fades into

11:55a minority coin. And this has actually

11:56happened before with the asset that's

11:58now known as Bitcoin Cash back in 2017

12:01during the last war. And you could see

12:03how its price has done. And history is

12:05brutally clear on what that uncertainty

12:07does in the short term because it's

12:09happened before, twice. Back in March

12:112013, a software bug accidentally split

12:14Bitcoin's chain for a few hours and

12:16Bitcoin dropped 23% almost instantly

12:19from around $48 to $37 before miners

12:22coordinated a fix and it recovered

12:24within days. Then in 2017 in the run-up

12:26to the Bitcoin Cash split, fear over the

12:28uncertainty dropped Bitcoin roughly 30%

12:31from its summer highs down toward $2,000

12:34before it resolved and ripped to $4,000

12:36within 30 days and $20,000 by year end.

12:39It was the same pattern both times. Fear

12:42on the uncertainty and then a violent

12:44rally once the winner is clear.

12:45Exchanges freeze deposits, traders

12:47panic, price drops hard and fast and

12:50then capital floods back the moment the

12:52market knows which chain is Bitcoin. So,

12:55where do I land on this war for the soul

12:57of Bitcoin? Because I told you I

12:59wouldn't fence it. Well, I lean pro Bip

13:02110 and here's my honest reasoning

13:04before you click off and then I want to

13:06hear yours. I think Bitcoin is money. I

13:09think it's a store of value. As you know

13:10on this channel, I talk ad nauseam about

13:12how Bitcoin is the best performing major

13:14macro asset the last 15 years. And it

13:17earned that title precisely because it

13:19does one thing exceptionally well. It is

13:21the most verifiable, most credibly

13:23scarce money ever created. And the

13:25property that makes it good money, that

13:27anyone can cheaply verify the whole

13:29thing, is the exact property that

13:31arbitrary data storage erodes. So, if

13:34Bitcoin becomes a place to dump images

13:36and files, it doesn't become more

13:39valuable. It becomes the world's most

13:40expensive and least efficient

13:42spreadsheet. So, on principle, I'm with

13:45the people trying to protect the

13:46monetary use case. But, and this is the

13:48balanced part, I don't think this is

13:50life or death for Bitcoin. And here's

13:52why I think so. This is a $1.1 trillion

13:54asset with deep ties to BlackRock, to

13:57Fidelity, to public company treasuries,

13:59to the US government. If this proposal

14:01were an actual existential threat, if it

14:02were genuinely going to kill Bitcoin,

14:04you'd be hearing five alarm sirens from

14:06every one of those institutions. But,

14:08you're not. The relative quiet from the

14:10biggest, most exposed holders on the

14:12planet tells you something. They're not

14:14panicking because whether this passes

14:16this time or not, the market underneath

14:18Bitcoin isn't going anywhere. And that's

14:20what I keep going back to. Remember the

14:22five pillars that I talked about at the

14:23start of the video? The whole point is

14:25that no developer, no pool, no single

14:28proposal decides what Bitcoin is. The

14:30market decides. And every form of money

14:33in history has moved through the same

14:35four phases. It begins as a collectible,

14:38then it becomes a store of value, then a

14:40medium of exchange, and then finally a

14:42unit of account, the thing that

14:44everything else is priced in. Bitcoin is

14:46somewhere in that second phase right

14:48now. It's climbing, it's monetizing,

14:49it's growing more valuable as a store of

14:51value. And the market has already spent

14:5415 years voting with real capital on

14:57what it wants Bitcoin to be. It has

14:59chosen Bitcoin's primary use case to be

15:01the hardest, most verifiable money, and

15:03the best performing store of value out

15:05there. And I trust that same market to

15:07arrive at whatever answer is best for

15:09Bitcoin's long-term survival, on this

15:11fight and every fight after it. Now, let

15:14me get ahead of a question I know some

15:15of you are asking. Do I think Bitcoin 10

15:18is the reason Bitcoin has been getting

15:19hit lately? No, I don't. Bitcoin's price

15:22action right now is a macro story, as

15:24I've discussed in my prior videos. This

15:26war for the soul of Bitcoin and its

15:28future is very real, and it matters

15:29enormously for what Bitcoin is over the

15:32long run and how its price performs.

15:34But, it's not what's moving the candles

15:35on your screen this week. So, don't let

15:37anyone tell you the fork is why Bitcoin

15:39is down. It's not true. And here's the

15:41part I actually want you to walk away

15:43thinking about, because if you ask me

15:45what could genuinely kill Bitcoin, it

15:47isn't Bitcoin 10. This whole fight is

15:49Bitcoin arguing with itself about what

15:51it wants to be, and that argument is

15:53actually a sign of life, not death. The

15:55real threat, the one that could actually

15:57break this thing, is coming from the

15:59outside, and it's quantum computing. A

16:01powerful enough quantum computer could

16:03one day threaten the cryptography that

16:04secures every Bitcoin wallet on the

16:07network. That is the existential risk.

16:09And here's the good news and the reason

16:10that I'm not losing sleep over it, the

16:12Bitcoin network is already working on

16:14it. There are active proposals right now

16:16aimed at making Bitcoin quantum

16:17resistant, at upgrading that

16:19cryptography before the threat even

16:20becomes real. That is where the serious

16:22long-term attention belongs, not on

16:24whether we can store a JPEG in a block,

16:25but on whether Bitcoin stays uncrackable

16:28for the next thousand years. And it's

16:30the same five pillars, the same process,

16:32that will decide it. So, let me bring

16:34this home. There is a war over whether

16:36Bitcoin is money or a glorified hard

16:39drive, and it comes to a head in about

16:4036 days on a nice edge of only 0.3% of

16:43minor support and a deadline that

16:45doesn't care. It might split the chain,

16:47and we might be in for a scary, volatile

16:49week, but it also might fizzle into

16:52nothing. But, the thing underneath it,

16:53the reason that five pillars have to

16:55agree, the reason it took a war in 2017

16:58and it's taking a war now, is that

17:00Bitcoin is the first money in history

17:02that its only users get to defend.

17:04That's not a weakness, that's the entire

17:07point. So, whichever way you lean, I

17:09genuinely want to know. So, down in the

17:11comments, give me your best case. Are

17:13you pro Bitcoin 10 or pro Bitcoin Core,

17:15and why? Make the strongest argument

17:17that you can for your side because I

17:19read all of these and the sharpest ones

17:21are what I build the next videos around.

17:22And please be respectful. So, if this

17:24war isn't what's moving Bitcoin's price,

17:27it's the macro backdrop, which is

17:28exactly what I broke down in my last

17:30video on why Bitcoin likely has one more

17:33leg down before it finds its floor. So,

17:35go watch that one next and I'll see you

17:37over there. Channel members also got

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17:49the link in the video description. Our

17:50very first live session goes on

17:53tomorrow. It's going to be 90 minutes.

17:54We're going to do a breakdown on

17:55everything that's happening plus a Q&A

17:57at the very end. You can also book a

17:59one-on-one session with me at the link

18:00in the video description. I'll see you

18:02in the next one.