The activation of the Taproot upgrade in 2021 allowed developers to embed images, text and other data directly into Bitcoin transactions. These “incriptions” gave rise to Ordinals which enabled Bitcoin’s own version of non-fungible tokens (NFTs) an subsequently Runes, which could be described as a protocol for minting memecoins.
Their supporters argue that these applications used Bitcoin exactly as designed, paying a price for blockspace and using that space as they see fit. It was not, they said, Bitcoin’s job to decide what could and could not be stored on its network.
Others disagreed. Certain long-time Bitcoin users such as veteran developer Luke Dashjr argued that these applications were exploiting technical loopholes rather than harnessing intended functionality. The contention is that large amounts of non-financial data unnecessarily expands the blockchain, increasing bandwidth requirements needed to operate a full node and making decentralization harder to preserve due to favouring big mining companies.
BIP-110 wasn’t designed to outright ban non-financial data, but to temporarily tighten the consensus rules on transaction data, making inscription methods impossible.
The intended timescale of around a year would give developers time to consider longer-term solutions while preserving blockspace in the interim.
These objectives became somewhat muddied in the ensuing debate as opponents argued against subjective judgements about how blockspace should be used.
