After Taproot, the most important upgrade for Bitcoin in 4 years.

Written by: Jaleel Jia Liu

In recent days, there has been a lot of discussion on the external network regarding the proposal to lift the OP_RETURN restriction - a proposal put forward by Bitcoin Core OG developer Peter Todd.

(It is worth mentioning that HBO identified Peter Todd as Satoshi Nakamoto in its heavily promoted documentary "The Bitcoin Mystery: Currency Electric," which led to Peter Todd receiving numerous funding requests and threats, and he is now living in hiding.)

Although there are many doubts in the community about this OP_RETURN change, according to an announcement made by Bitcoin developer and Blockstream core contributor Greg Sanders (nickname "instagibbs") on May 5 on GitHub: in the next network upgrade, Bitcoin Core will no longer impose any byte or quantity limits on OP_RETURN.

What is OP_RETURN?

We all know that Bitcoin is an immutable ledger, where each transaction is like writing a line of record on it.

OP_RETURN is like sticking a "note" on the edge of a page — you can write dozens of words or small chunks of data into it, and this note is marked by the system as "read-only"; others cannot use it as money, nor will it affect the other "money" records in the ledger.

The reason for having such a "note" function is that sometimes people want to permanently pin some extra information (such as legal proofs, short messages, anniversaries, or even confessions) onto the chain, but do not want to occupy the UTXO space used for storing "tradeable" Bitcoins. With OP_RETURN, this information is like waste paper thrown into a drawer—nodes only leave a trace without occupying storage, and the "available funds" on the chain remain clean and tidy.

In the past, to prevent someone from writing long "notes" and clogging up the network, Bitcoin Core by default only allows one OP_RETURN per transaction, with a maximum of 80 bytes of content. If exceeded, nodes will directly refuse to relay and will not assist in packaging.

Now, the 80-byte limit and single transaction limit are gone - you can write as long as you want, multiple notes are fine, nodes will automatically relay, and miners are happy to package them.

In fact, there have always been people bypassing 80 bytes.

When there were OP_RETURN restrictions before, there were also ways to bypass the 80-byte limit. No matter how strict the filtering and relay strategies are, they cannot stop those who truly want to write data on Bitcoin. Because only miners and transaction fees determine which transactions are included in the blockchain, offering higher rewards to miners naturally leads them to bundle more transactions, and the gameplay will not change due to node strategies.

For example, many people know that the Tapoort Wizz NFT, a great wizard, fills a block with an image close to 4M. Additionally, back in the day, Ordinals inscriptions and runes used various "workarounds and alternatives" to bypass restrictions, with some even written into spendable outputs, which occupy more resources instead.

Does this better align with the spirit of Bitcoin?

According to the announcement released by Bitcoin developer Greg Sanders and the consensus of various developers, we know that Bitcoin Core has its own "standardness policy" in the transaction relay phase, which serves three layers of checks before the transaction reaches miners: first, to prevent "denial of service" attacks by rejecting transactions that consume far more computing power, memory, or bandwidth than their transaction fees; second, to guide wallet authors to construct transactions that save fees and do not create redundant UTXOs; third, to retain upgrade safety—treating unknown opcodes or version bits as "non-standard" until the soft fork is officially activated.

OP_RETURN and its 80-byte limit are precisely the products of this concept: providing users with an output that can be proven to be "unspendable," which can store small commitments or hashes, while also allowing nodes not to count it towards UTXO, thereby avoiding "wasted" outputs on-chain.

But now this soft limit has become a chicken rib. On one hand, private mining pools and some centralized services do not enforce this rule at all; anyone who wants to write a large amount of data can bypass the strategy—either by directly paying miners or by using bare-multisig, fake public keys, or even spending scripts to hide the information—to still shove the content onto the chain. On the other hand, constantly adding a bunch of blacklist filters will only evolve into a game of "cat and mouse," which neither prevents the most basic data writing nor increases the risk of mistakenly harming user funds.

Developers who support the proposal believe that removing the 80-byte limit entirely will bring two significant benefits to nodes and wallets: first, the UTXO set will be cleaner, as data will be packed into a clear "unspendable" OP_RETURN output, rather than being entangled in various fancy scripts or multiple transactions; second, nodes will have a more unified approach to propagating transactions, aligning with what miners actually package, making wallet fee estimates and compact block relay more reliable.

Bitcoin developers compared three proposals, and the currently adopted "cancellation" proposal has the strongest momentum in the community. More importantly, they believe that the removal of the OP_RETURN restriction is the best interpretation of Bitcoin's "transparent and minimalist" spirit: when a strategy has lost its intended function but is still retained, it only adds complexity and friction; removing it allows node software to be lighter and purer, and enables each transaction's propagation and packaging to be straightforward—miners only need to decide priority based on the fee levels, and the fee market naturally adjusts the competition for various demands.

Once there is a real threat of excessive writing and resource consumption on the chain, the Bitcoin ecosystem has a whole set of tested "targeted" protections: signature operation limits, limits on the number of previous and subsequent transactions, dust rules... These precise measures targeting specific abuse scenarios are much more flexible than the one-size-fits-all "80 bytes" and can better protect every node and user without harming normal usage.

Will BTC become a altcoin?

Among the most well-known opponents, Luke Dashjr should be the most prominent.

As a Bitcoin OG, Luke Dashjr, who once stated that "the Ordinals protocol is an attack on Bitcoin" and "inscriptions are garbage, they are bugs that can be fixed," has been a vocal critic of the Ordinals protocol.

This time, he still firmly stood on the "conservative" side, believing that removing the OP_RETURN limit is a very crazy thing, an attack on Bitcoin. He and others believe that removing the limit will lead to spam and higher transaction fees.

It is evident that the current debate and point of contention revolve around whether removing the 80-byte OP_RETURN limit will enhance transparency and simplify the data usage of Bitcoin, or whether it will open the door to abuse, spam, and divert Bitcoin from its financial focus.

Jason, the Vice President of Ocean Mining Pool, is one of the most vocal critics and has lost sleep over it. He even stated, "This change will turn Bitcoin into a worthless altcoin."

Willem Schroe, the founder of Botanix Labs, stated that he believes developers should view Bitcoin as a currency system rather than a data storage platform. Another Bitcoin Core developer, Mechanic, shares a similar view: Bitcoin should not be used for arbitrary file storage, and all possible measures should be taken to ensure this.

Some influential KOLs in the industry, such as Samson Mow, are encouraging node operators not to upgrade their Bitcoin Core version or switch to Knots.

As of the time of writing, according to data from Clark Mood, the usage rate of Bitcoin Knots nodes has surpassed that of the latest version of Bitcoin Core nodes.

This is yet another challenge to Bitcoin's consensus, just like many times before. Of course, this also makes us realize that although Bitcoin is more conservative than most networks, it is not set in stone. After the next upgrade, we may also get more concise and elegant protocol mechanics than Ordinals, Atomicals, and Runes.