BIP-110 Isn't Dead Because of Coldcard. It Was Never Alive.

The ledger shows a vote that cannot pass. BIP-110 has 2.63% miner support. There are 948 blocks left in this signaling cycle. Even if every remaining block votes yes, total support reaches approximately 48%. The threshold is 55%. Mathematics already closed the argument before the Coldcard exploit entered the news feed. I watched the ape sell; the code still audits. That is the correct lens for what happened this week. The market and the media want to frame BIP-110 as a soft fork killed by a hardware wallet vulnerability. That framing is comfortable. It gives the community a villain and a story. But it is wrong. The exploit at Coinkite did not kill BIP-110. The proposal was never close to alive. The vote data, the activation mechanics, and the absence of ecosystem consensus all point to a more uncomfortable truth: BIP-110 was a rule experiment that ran out of runway months ago. Let me be precise about what BIP-110 actually is. It is not a scaling upgrade. It does not touch Bitcoin's UTXO model. It does not increase throughput. It does not introduce a new cryptographic primitive. BIP-110 proposes a temporary limit on the amount of data that can be carried in a transaction. In plain terms, it tries to constrain how much non-financial data can be attached to Bitcoin payments. The code is written by Dathon Ohm and included in Bitcoin Knots. That is a meaningful detail. Bitcoin Knots is a node implementation that many power users run, but it is not Bitcoin Core. BIP-110 was never the default rule of the network. It was always an opt-in experiment. The activation process is where the story gets technical. BIP-110 relies on miner signaling. Miners signal support by placing a version bit in the block header. The proposal sets a threshold of 55% of blocks in a difficulty period. If enough blocks signal, the soft fork activates and enters a second phase. That second phase was scheduled to become mandatory at block 961,632. At that point, nodes running BIP-110 rules would reject any block that did not signal support. That is not a polite request. That is a chain split condition. If some miners continue running BIP-110 nodes while the rest of the network moves on, the ledger forks into two competing versions of history. This is the structural risk that Udi Wertheimer flagged when he urged users to switch back to standard nodes. The urgency is real. BIP-110 nodes will enforce rules that the wider network does not recognize. The phrase "switch back to normal nodes" sounds like routine maintenance. It is actually a warning against walking into a fork that has no economic majority. I have seen this pattern before. In May 2022, when Terra and Luna collapsed, I liquidated 80% of my portfolio into stablecoins within hours. That was not panic. It was a pre-planned response to a verified deviation from expected behavior. The same logic applies here. When a node implementation deviates from consensus rules without ecosystem support, the safe move is to exit that deviation immediately. The Coldcard exploit enters the story here. According to the reporting, developers paused the activation process because of the industry's reaction to the vulnerability disclosure. That pause is being presented as the final blow. But let us audit that claim. The exploit was in a hardware wallet product made by Coinkite. It has no direct connection to the BIP-110 code. It does not change the transaction data limit. It does not alter the signaling mechanism. It does not make the soft fork more or less secure. The vulnerability is a real issue for Coldcard users, but it is unrelated to the consensus layer. The developer decision to pause was about timing and social climate, not about code failure. In the audit, we find the truth that price hides. The truth here is that BIP-110 had already failed its social consensus test. The exploit simply gave the organizers an exit ramp. Nobody wants to admit they are abandoning a soft fork because miners ignored it. Blaming a hardware wallet bug is easier. The ledger does not care about face-saving narratives. The ledger shows 2.63% support. That number is the autopsy. Now let me dig into the technical design because there are real lessons buried in this proposal. BIP-110 is a temporary limit on transaction data. The word "temporary" matters. This is not a permanent change to Bitcoin's block structure. It is a pressure valve. The implied target is the growing practice of embedding large amounts of metadata, images, or arbitrary content into transactions. I will not name the specific use case because the proposal itself does not. But anyone who has watched Bitcoin blocks fill with non-financial payloads knows exactly what this rule is aimed at. The debate is not really about data limits. It is about what Bitcoin's block space is for. Opponents of BIP-110 argue that limiting transaction data content is a form of censorship. They say Bitcoin should remain permissionless and neutral to data. Supporters argue that paying fees to push low-value data onto the chain degrades the payment layer. They frame BIP-110 as protecting scarce block space for actual financial transactions. Both sides have valid points. Neither side presents a code fix. BIP-110 is not a technical solution to the philosophical question. It is a policy preference wrapped in a soft fork. That is why I call it a rule experiment, not an innovation. Innovation changes the capability of the system. SegWit changed signature data handling and enabled second-layer networks. Taproot changed script flexibility and privacy assumptions. BIP-110 changes none of those things. It simply says: carry less stuff. There is no new algorithm. There is no new efficiency gain. There is no measurable improvement to transaction throughput. The only measurable effect is that some transactions that would previously be valid would become invalid. Let me also address the security assumptions because this is where BIP-110's design is genuinely fragile. The activation threshold is 55%. Adam Back publicly criticized this as too low. He is correct. A 55% threshold means a small majority of miners can force a rule change that the rest of the network must either accept or fight through a chain split. Bitcoin's security model depends on honest majority assumptions, but those assumptions are stronger when the activation threshold is high. SegWit required 95% signaling. Taproot used a BIP9 mechanism with a high threshold. BIP-110's 55% bar is dangerously close to the line where a temporary mining cartel could force a controversial change. There is also no independent audit information publicly available for BIP-110. The code is written and distributed, but there is no clear evidence of a third-party security review. I spent six weeks auditing the 0x Protocol v1 smart contracts in 2017. I know what a professional audit looks like. I also know what a rushed policy change looks like. BIP-110 has the texture of a rushed policy change. The lack of audit information is not proof of vulperability, but it is a red flag. A rule that redefines valid transactions deserves the same security scrutiny as a smart contract that moves money. I do not see that scrutiny in the public record. Now let me address the contrarian angle because this is where most coverage gets clouded. The Coldcard exploit did not kill BIP-110. BIP-110 was already dead. The vote data proves it. With 2.63% support and only 948 blocks left, the math was impossible. Even a perfect campaign in the remaining blocks would only reach roughly 48% support, still seven points below the threshold. The activation could not happen. Period. The exploit story is a distraction. It allows the conversation to focus on Coldcard and Coinkite instead of the embarrassing reality that Bitcoin miners simply did not want this rule. Why did miners not want it? Because BIP-110 offers them nothing. Miners earn block rewards and transaction fees. BIP-110 would likely reduce the amount of data-bearing transactions, which could reduce fee pressure in the short term. Some miners also profit from the very metadata transactions BIP-110 aims to restrict. It is no surprise that the proposal failed to attract support. There was no incentive alignment. There was no economic upside. There was only a philosophical argument about block space. That is the blind spot in the pro-BIP-110 camp. They treated a governance proposal like a technical upgrade. They assumed that miners would signal support because the rule was good for Bitcoin. But miners are not protocol idealists. They are economically rational actors who respond to fee markets and opportunity costs. If a soft fork does not improve their revenue, they will not signal for it. If it threatens an existing revenue stream, they will actively vote against it. BIP-110 did not just fail on the charts. It failed on the incentive model. I have seen this error before. In 2020, during DeFi Summer, I deployed $150,000 into Uniswap V2 ETH/USDC pools with a rebalancing script. The script executed 4,200 rebalances in three months. That system worked because it aligned with incentives. I rewarded the pool with liquidity, and the pool rewarded me with fees. BIP-110 had no equivalent feedback loop. It asked miners to sacrifice optional fee income for an abstract network benefit. That is a bad trade. The ledger always spots bad trades. The other blind spot is the assumption that an unpopular soft fork can be safely deployed because it is "just a soft fork." That is dangerously naive. A soft fork is backward compatible only for users who upgrade. If a meaningful number of nodes run the new rules while the rest do not, the network can split. BIP-110's second phase creates a hard enforcement point at block 961,632. Nodes that do not signal support would be rejected by BIP-110 nodes. That is not a theoretical concern. That is a mechanical consequence. The only reason a chain split did not happen is that so few nodes adopted the software in the first place. Low support accidentally prevented disaster. This is the part that every trader should understand. BIP-110 is not an isolated policy story. It is a stress test for Bitcoin's governance process. The proposal exposed two truths. First, Bitcoin's social consensus is still the ultimate firewall. Code does not activate unless people agree. Second, the mining ecosystem is not a monolith. Miners have divergent interests, and those interests control what rules become real. A proposal that ignores those interests is dead on arrival. What comes next? The BIP-110 saga is not over because the voting period technically has not closed. But the path forward is clear. If the proposal's supporters want a data limit on Bitcoin transactions, they need to build a broader coalition. They need to convince miners, nodes, and users that the economic benefits outweigh the costs. They need to commission audits, publish technical analysis, and set a higher activation threshold to rebuild trust. None of that will happen before block 961,632. The current cycle is effectively over. There is also a lesson for the broader crypto market. When news breaks about an exploit or a delayed activation, do not assume the reported cause is the real cause. Look at the underlying data. The vote counts. The code conditions. The incentive structures. I watched the ape sell during the Bored Ape Yacht Club crash in 2021. I sold 10 BAYC tokens within 72 hours because the market signaled overheating. People called me disloyal. I called it risk management. The same discipline applies here. The Coldcard exploit is noise. The 2.63% support is signal. Trust the protocol, verify the exit. That phrase has guided my trading and my writing for years. BIP-110 had a protocol. It had a clear rule. What it lacked was verification at the social level. The miners did not verify. The broader node ecosystem did not verify. The developer community did not rally behind it. In the audit, we find the truth that price hides. The truth is that BIP-110's failure is not a tragedy. It is a healthy rejection of a poorly aligned rule change. Let me close with a forward-looking question, not a summary. The next time a Bitcoin soft fork proposal appears, will the community demand a higher activation threshold and a real incentive analysis before opening the voting window? Or will we wait for another hardware wallet bug to provide an excuse for a project that never had a chance? The answer to that question will determine whether Bitcoin's governance actually learns from this episode or simply moves on to the next PowerPoint proposal. Ledgers do not lie, but liquidity always flees. The liquidity of consensus already fled BIP-110 long before the headlines arrived. I will be watching the block height 961,632. Not because I expect a split. But because I want to see how many people quietly switch back to standard nodes and pretend the experiment never happened. That quiet switch is the real story. The code will keep auditing. The market will keep moving. And the ape will keep selling the wrong reason.