Proposal Aims to Restrict Data in Bitcoin Transactions
A Bitcoin improvement proposal for a soft fork, published on Friday, has ignited controversy within the community. Core developer Luke Dashjr created the proposal with the intention of restricting data within Bitcoin transactions through a one-year temporary soft fork. This measure is intended to address concerns about malicious actors embedding illegal content into the blockchain, particularly following the Bitcoin Core v30 update.
The proposal states that "there is a moral and legal impediment to any attempt to reject this soft fork." It further clarifies that "rejecting this soft fork may subject you to legal or moral consequences, or could result in you splitting off to a new altcoin like Bcash." This proposal represents the latest development in the ongoing debate between Bitcoin Core and Knots regarding the filtering of non-financial transactions from the network.
Submitted on October 24, 2025, to the Bitcoin Improvement Proposals repository under the title "Reduced Data Temporary Softfork," the document was authored by contributor "dathonohm" and references an earlier mailing-list concept from Luke Dashjr. The pull request outlines two activation paths: "proactive" and "reactive."
Community Reactions and Criticisms
The language used in the proposal immediately drew criticism from developers and community members who perceived it as threatening. Software engineer Ben Kaufman described a "fork under the threat of legal consequences" as "the most clear case of an attack on Bitcoin." Cryptographer Peter Todd commented that it appears "clear he expects his soft-fork to get adopted due to legal threats." Alex Thorn of Galaxy Digital agreed, stating the proposal is "explicitly an attack on Bitcoin, however, it's also incredibly stupid."
Critics argue that restricting data fundamentally contradicts Bitcoin's core principle of permissionless use. User Leonidas from the Ordinals community claimed in September that miners representing more than half of Bitcoin's hash rate would accept any consensus-valid transactions with appropriate fees. Some community members warned that a chain split could occur if miners and users diverge over the activation of the proposal.
This controversy highlights ongoing tensions regarding Bitcoin's intended purpose, with some users suggesting the liability reference pertains to potential criminal exposure arising from illegal blockchain content. In response to criticism, Dashjr posted that the proposal "doesn't say that" about making rejection illegal and suggested proposing a clarification if the language seemed unclear. In related news, 15 US states are reportedly moving forward with plans for Bitcoin reserves, indicating growing institutional interest amidst these internal governance debates.
Implications for the Bitcoin Industry
The soft fork debate underscores deeper divisions concerning Bitcoin's evolution and its governance structure. Peter Todd claims to have recorded a transaction containing the entire text of the proposed fork, which remains "100% standard and fully compatible" with the improvement proposal. This suggests that technical workarounds might emerge before the proposal is even implemented.
BitMEX Research has cautioned that malicious actors could potentially exploit the proposal by placing illegal content on-chain to trigger network reorganizations and execute double-spend attacks. The controversy arises at a time when Bitcoin's governance processes are facing increased scrutiny. Notably, the proposal has not yet been distributed to the Bitcoin Development Mailing List, a crucial step for gathering feedback and moving towards potential acceptance.
Dashjr stated his assessment is that the soft fork is "on track with no technical objections." The debate continues to unfold across various forums and social media platforms. The proposal specifically impacts protocols that utilize witness or script space for non-monetary payloads, particularly Ordinals-style inscriptions. If adopted, the temporary fork would temporarily halt certain data storage methods for its duration. Critics view this as protocol-level censorship, while supporters consider it a necessary security measure.
The lack of consensus on fundamental questions about Bitcoin's purpose reflects broader challenges faced by decentralized networks as they scale. The eventual outcome of this debate is likely to influence future governance discussions and establish precedents for how controversial protocol changes are evaluated and implemented.