BIP-110 Fork Stalls at Two Blocks as Bitcoin Miners Refuse to Follow

§ 01 Executive Snapshot

• What: The Bitcoin Improvement Proposal (BIP)-110 has stalled due to a lack of support from miners, causing a chain split.
• Who: Key players include the mining group Roughnecks, Michael Saylor, and Blockstream's Adam Back.
• Why it matters: The failure of BIP-110 highlights significant challenges in miner consensus and governance within the Bitcoin network, impacting future proposals.

§ 02 Key Developments

• The chain split occurred at block 961,632 when BIP-110 nodes rejected a block that did not signal support.
• Only 51 of the 2,016 blocks in the preceding difficulty period signaled for the proposal, about 2.53%, far below the 55% threshold needed for lock-in.
• The enforcing branch of the BIP-110 chain remained at block 961,633 while the dominant chain progressed to block 961,744, resulting in a gap of 111 blocks.

§ 03 Strategic Context

• Historical attempts at activating proposals in Bitcoin often face challenges due to the decentralized nature and differing opinions among miners.
• The challenges faced by BIP-110 reflect broader issues in governance and consensus-building in the Bitcoin ecosystem, especially regarding changes that impact transaction data management.

§ 04 Strategic Implications

• The immediate consequence is a lack of progress on the BIP-110 proposal, which may discourage future proposals that require miner consensus.
• In the long-term, the failure to achieve agreement on BIP-110 may lead to more stringent scrutiny of activation methods for future proposals, affecting the evolution of Bitcoin's protocol.

§ 05 Risks & Constraints

• Regulatory or technical roadblocks could arise from the bifurcation of the network and miners' differing priorities.
• The risk of infrastructure dependency on a minority of miners could hinder the viability of future proposals if consensus cannot be reached.

§ 06 Watchlist / Forward Signals

• Observing the hashrate distribution among miners will provide insights into future consensus for Bitcoin proposals.
• Future developments in miner consensus mechanisms or alternative proposals will signal the network's ability to adapt and evolve effectively.