
Debate surrounding Bitcoin’s proposed BIP 110 soft fork is growing more intense, as critics warn the upgrade could create major wallet compatibility issues and potentially leave some users with permanently inaccessible funds.
The concerns were raised by Farside Investors, which challenged statements made by BIP 110 supporter Fred Krueger in a June 28 post on X.
Concerns Over Wallet Compatibility and Frozen Funds
Krueger argued that BIP 110 would not alter Bitcoin’s core monetary principles. According to him, the 21 million coin supply, proof of work system, Lightning Network, multisignature wallets, self custody, and address functionality would all remain unchanged.
He stated that the main effect of the proposal would be to invalidate large arbitrary data used by protocols such as Ordinals and Runes.
However, Farside strongly disagreed with that view.
The firm argued that BIP 110 would ban several Taproot scripting features, including the OP_IF opcode used in Miniscript. This creates a serious concern for wallets that currently support Miniscript.
According to Farside, even after the fork is activated, some wallets may continue generating addresses based on scripts that would no longer be valid under the new rules.
As a result, users could unknowingly send Bitcoin to addresses that appear valid but become impossible to spend from after activation. In such cases, funds sent to those addresses could effectively become permanently locked.
Adding to the concern, Farside noted that even the latest version of Bitcoin Knots, one of the node implementations supporting BIP 110, may itself generate incompatible addresses.
The firm also highlighted another issue involving pay to public key outputs, commonly known as P2PK.
This script type was widely used in Bitcoin’s early years and still holds more than 1.7 million BTC. Under BIP 110, the creation of new P2PK outputs would be prohibited, although spending existing ones would remain allowed.
Farside warned that despite safeguards such as grandfathering older outputs and limiting enforcement to roughly one year, the proposal could still temporarily freeze funds or expose users to theft risks under certain conditions.
BIP 110 could become active if 55% of miners signal support during a difficulty adjustment period. If that threshold is not reached, activation could still occur through a mandatory signaling mechanism starting at block 961,632, which is expected in August 2026.
Broader Debate Over Bitcoin Network Usage
The controversy around BIP 110 extends beyond wallet compatibility and touches on a larger debate over Bitcoin network congestion.
Supporters such as Krueger argue that inscriptions, BRC 20 tokens, and similar use cases have added unnecessary congestion to the network. They believe BIP 110 offers a way to reduce this activity without changing Bitcoin’s monetary foundation.
Critics reject that argument.
The Block Runner Podcast account argued that the 126.7 million inscriptions on Bitcoin represent only 1.267 BTC in value, describing the amount as negligible relative to the overall network.
They also pointed out that miners are benefiting financially from this activity. Mining groups such as AntPool, ViaBTC, SpiderPool, F2Pool, and Luxor are reportedly earning fees from these transactions, helping offset Bitcoin’s declining security budget.
At the same time, BIP 110 appears to have limited support among both miners and node operators.
Meanwhile, network activity remains strong despite market weakness. Recent data from CryptoQuant shows Bitcoin network usage remains near record levels even as BTC trades below $60,000, suggesting demand for blockspace remains strong regardless of the ongoing debate.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic








