Cancel OP_RETURN restrictions: The most important upgrade of Bitcoin in 4 years after Taproot

Author: Jaleel Garlier

In recent days, the proposal of the foreign network to lift the OP_RETURN restrictions has been buzzing - this is a proposal issued by Peter Todd, the developer of Bitcoin Bitcoin Core OG.

Although there are many doubts about the OP_RETURN changes in the community, according to the announcement released by Bitcoin developer and Blockstream core contributor Greg Sanders (nicknamed "instagibbs") on GitHub on May 5: In the next network upgrade, Bitcoin Core will no longer limit any bytes or quantity on OP_RETURN.

What exactly is OP_RETURN?

We all know that Bitcoin is an account book that can never be tampered with, and every transaction is like writing a line of records on it.

OP_RETURN is like pasting a "note" on the edge of the book page - you can write dozens of words of text or small pieces of data into it. This note is marked as "read-only" by the system. No one can use it as money, nor will it have any impact on the records of other "money" in the account book.

The reason for such a "note" function is that sometimes people want to permanently pin some extra information (such as legal proof, short messages, anniversary or even confession) to the chain, but they do not want to occupy the space used by UTXO to store "tradable" Bitcoin. With the help of OP_RETURN, this information is thrown into a drawer like waste paper - the node only leaves traces and does not occupy the stock, and the "available money" on the chain is still neat and neat.

In the past, in order to prevent people from writing long "notes" to block the network, Bitcoin Core only allowed one OP_RETURN in each transaction by default, and stored up to 80 bytes of content. When it exceeds it, the node will directly refuse to relay and will not help package it.

Now, the limits for 80 bytes and single numbers are gone - as long as you want, you can write as long as you want, and you can write a few notes, and the nodes will be automatically relayed and miners will be happy to pack them.

But in fact, there have been people who are bypassing 80 bytes all the time.

When there was an OP_RETURN limit before, there was also a way to bypass the 80-byte limit. No matter how strict the filtering and relay strategy were, it could not stop people who really wanted to write data on Bitcoin. Because only miners and handling fees decide which transactions are put on the chain and give miners a higher reward, they naturally tend to package more transactions, and the gameplay will not change due to node strategies.

For example, what you know a lot is that a picture of Tapoort Wizz NFT is filled with a block of nearly 4M. Ordinals inscriptions and runes are all made by various "detours and adaptations" methods to bypass restrictions, and some even write in the output that can be spent, which takes up more resources.

Is this more in line with the spirit of Bitcoin?

According to the announcement released by Bitcoin developer Greg Sanders and the agreement of various developers, we can know that first of all, Bitcoin Core has its own set of "standardness policy" in the transaction relay stage, which is used to do three layers of gatekeepers before the transaction reaches the miner: first, prevent "denial of service" attacks, and reject transactions that consume much more computing power, memory or bandwidth; second, guide wallet authors through strategies to construct transactions that save processing fees and do not create redundant UTXO; third, retain upgrade security - treat unknown opcodes or version bits as "non-standard" until the soft fork is officially activated.

OP_RETURN and its 80-byte upper limit are the product of this concept: giving users an output that can be proven to be "not to be spent", which can not only store small promises or hashes, but also prevent nodes from counting it into UTXO, thereby avoiding "lost money" garbage output on the chain.

But now this soft limit has become useless. On the one hand, private mining pools and some centralized services do not implement this rule at all. Anyone who wants to write a lot of data can use bypassing the strategy - either paying directly to the miner, or using bare‑multisig, fake public keys, or even spending scripts to hide the information - stuffing the content to be written on the chain; on the other hand, adding a bunch of blacklists to filter it at any time will only evolve into a "cat and mouse" game, which can't stop the most basic data writing and increases the risk of accidentally injuring users' funds.

Developers who agree with the parties believe that after completely removing the 80-byte upper limit, nodes and wallets can enjoy two practical benefits: one is that the UTXO set is cleaner, and the data is loaded into a clear "no cost-effective" OP_RETURN output, rather than being entangled in various fancy scripts or multiple transactions; the other is that nodes are more unified in which transactions are spread, and are consistent with the content actually packaged by miners, and the wallet's handling fee estimates and compact block relay are also more reliable.

Bitcoin developers compared three solutions, and the "cancel" solution currently adopted is the most popular in the community. More importantly, they believe that the cancellation of the OP_RETURN restriction is the best interpretation of Bitcoin's "transparent and simple" spirit: when a strategy has lost its due role, but is still retained, it will only increase complexity and friction; if it is eliminated, it will make the node software lighter and purer, and it will also make the spread and packaging of each transaction without any need to bend - miners only need to decide the priority based on the handling fee, and the rate market will naturally adjust the competition of various needs.

Once there is a threat of overwriting and devouring resources on the chain, the Bitcoin ecosystem has a complete set of tested "targeted" protections: signature operation restrictions, upper limit of transactions before and after generations, and dust rules... These methods to accurately combat specific abuse scenarios are much more flexible than the one-size-fits-all "80 bytes", and can protect every node and user without damaging normal use.

Will BTC become an altcoin?

The most well-known opponent should be Luke Dashjr.

As Bitcoin OG, Luke Dashjr, who once said that "the Ordinals protocol is an attack on Bitcoin" and "the inscription is garbage, a bug, and can be fixed", has always been a blunt critic of the Ordinals protocol in the past.

This time, he was still firmly on the "conservative" side, believing that lifting the OP_RETURN limit was a very crazy thing, an attack on Bitcoin, and he and others believed that lifting the limit would lead to spam and higher transaction fees.

It can be seen that the focus of the current debate and disagreement is whether lifting the 80-byte OP_RETURN limit will increase transparency and simplify the use of Bitcoin’s data, or whether it will open the door to abuse, spam and Bitcoin’s deviation from financial focus.

Jason, vice president of Ocean mining pools, was one of the most critical people, and he had insomnia for this and even said bluntly: "This change will turn Bitcoin into a worthless altcoin."

Willem Schroe, founder of Botanix Labs, said he believes developers should use Bitcoin as a currency system, not a data storage platform. Mechanic, another Bitcoin core developer, has a similar view: Bitcoin should not be used for arbitrary file storage, and every possible measure should be taken to ensure this.

Some influential KOLs in the industry, such as Samson Mow, are encouraging node operators not to upgrade their Bitcoin Core version or use Knots instead.

As of writing, according to Clark Mood's data, the usage of Bitcoin Knots nodes exceeds the latest version of Bitcoin Core nodes.

This is another challenge to Bitcoin consensus, like many times before. Of course, this also makes us realize that although Bitcoin is more conservative than most networks, it is not static. After the next upgrade, we may also get a more concise and elegant protocol gameplay than Ordinals, Atomicals, and Runes.