The debate over Bitcoin's OP_RETURN heats up

As developers of Bitcoin Core – the most popular node software – said they plan to scrap OP_RETURN entirely in the next release.

The debate over Bitcoin's OP_RETURN is heating up, with developers of Bitcoin Core - the most popular node software - planning to scrap the OP_RETURN limit altogether in the next release.

The OP_RETURN limit is an 80-byte cap on the amount of arbitrary data that can be embedded in a Bitcoin transaction using a special, unspendable output field.

Announcing the removal on Github, Core contributor and Engineer at Blockstream Greg Sanders, known as 'instagibbs,' said that large-data inscriptions are already happening and can be done in more or less abusive ways. According to him, the cap merely channels them into more opaque forms that cause damage to the network.

The discussion centered on whether lifting the 80-byte OP_RETURN limit promotes transparency and simplifies data use on Bitcoin, or if it opens the door to abuse, spam, and a shift away from Bitcoin's financial focus.

On Github, Sanders maintained that the constraint on the OP_RETURN size has ultimately led to more awkward workarounds. He explained that to put more data in transactions, users have been forced to embed it in fake public keys or spendable scripts, which are less efficient and create a messier UTXO set. He highlighted that removing the limit yields at least two tangible benefits: a cleaner UTXO set and more consistent default behavior.

However, not everyone shares this view. Core developer Luke Dashjr, a staunch critic of inscriptions and data storage in general, which he deems spam, expressed his disapproval, stating that this change was "utter insanity."

Amidst the ongoing controversy surrounding inscriptions and the planned changes to Bitcoin Core, an interesting development has unfolded with Bitcoin Knots, maintained by former Core developer Luke Dashjr, seeing a surge in adoption, now claiming approximately 5% share of all nodes.

Bitcoin Knots, a more customizable fork of Bitcoin Core, is appealing to users who wish to have greater control over what their nodes relay or store, enabling them to reject non-payment transactions such as inscriptions.

Moreover, some prominent thought leaders in the industry, like Samson Mow, are urging node operators not to upgrade their version of Bitcoin Core or to use Knots instead.

Bitcoin Core is planning to remove the OP_RETURN limit in their next release. Many users find this to be an undesirable change for a number of reasons. You can refuse to upgrade and stay on 29.0 or run another implementation like @BitcoinKnots.

Sanders defended the removal of the cap as aligned with Bitcoin's ethos: minimal, transparent rules.

"By retiring a deterrent that no longer deters, Bitcoin Core lets the fee market arbitrate competing demands and the minimal commonality of the coins’ program puts less stress on implementations to maintain compatibility with each other or with maximal coins."

But that isn't bringing much consensus.

"This marks a fundamental shift in the direction of Bitcoin. It's no longer an economic chain but rather a general-purpose programmable chain. I believe this changes the character of the network in a way that will ultimately be disastrous," one commenter warned on GitHub.

"I want to be on the record saying that this is the largest mistake Core can make at this juncture. We're losing the economic focus and pivoting to a general-purpose programmable chain at the worst possible time."