Why updating the Bitcoin OP_RETURN function is controversial
TLDR:
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- The OP_RETURN function defines what can be stored on the Bitcoin blockchain
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- Updating the function has divided the Bitcoin community
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- A section of the community thinks it goes against the network�s core business, while others think it's time to open up the blockchain
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The Bitcoin blockchain is facing fierce competition from Ethereum, Solana, and Cardano due to its inability to directly support DeFi, NFTs, and Web3 applications without the need for Bitcoin layer 2s. This has seen the blockchain�s core software, Bitcoin Core, implement new changes meant to enhance access to the network. One way it�s doing this is by updating Bitcoin Core�s OP_RETURN function. Although the update doesn�t change Bitcoin�s functionality or operation, it has divided the Bitcoin community on whether or not it aligns with Satoshi Nakamoto�s vision.
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But what does the OP_RETURN function do on the Bitcoin blockchain, and why is altering it controversial?
What is the Bitcoin OP_RETURN function and what does it do?
In its simplest form, OP_RETURN is a function or a set of instructions that enable blockchain users to store non-financial data on a blockchain. The function defines, among other things, how much space this arbitrary data can occupy on the blockchain.
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The data or messages stored using the OP_RETURN function are embedded in transactions and are verifiable. Despite being part of transactions, nodes on a blockchain network, in this case, Bitcoin miners, can choose to exclude them from transactions.
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The OP_RETURN function is baked into the Bitcoin Core software to allow Bitcoin users to include extra and often unrelated details in a transaction. OP_RETURN offers a more effective way of storing data on the Bitcoin blockchain compared to using the Unspent Transaction Output (UTXO) option.
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OP_RETURN allows the creation of things like Bitcoin Runes and Ordinals, commonly known as Bitcoin NFTs.
Why Bitcoin Core devs want to update the Bitcoin OP_RETURN function
A section of Bitcoin Core developers wants to update the function to increase the storage space meant for extra, non-financial data, from 83 bytes to 4MBs. This means that Bitcoin users can store more data, like audio and videos, along with transaction data.
The supporters' views
Among the update�s main proponents is Bitcoin Core developer Gloria Zhao, who announced in June that the update has been finalized and is scheduled to go live in October 2025.�
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Zhao argued that removing the storage cap defined by the OP_RETURN function gives the Bitcoin community he freedom to choose how they want to use the BTC-powered network. Zhao added that �demanding that Bitcoin Core prevent certain transactions from being mined reflects a misunderstanding of the relationship between open source software users and developers.�
Dissenters� views
Bitcoin diehards are skeptical about the update, saying that the BTC-powered protocol should only support financial data. Its supporters argue that it�ll increase the network's usage and consequently adoption.
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Dissenting Bitcoin community members also argue that allowing large amounts of non-financial data may bloat the network and unnecessarily increase the blockchain�s size. They also lamented that removing the limit on the size of data stored using the OP_RETURN function will allow malicious actors to spam the blockchain.
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Juanitodd, a community member, for example, lamented that �there was no clear consensus [...] and therefore should have never been merged, �
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According to Alexander Lin, an executive at a crypto investment firm, expanding the data limit is a �terrible mistake.� Lin thinks that the update threatens Bitcoin�s �sound money� status. He added that the Bitcoin �market is not sufficient to defend decentralization when all it knows is extraction.�
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Dennis Porter, the CEO of Satoshi Action Fund, said the update has broken his faith in the Bitcoin blockchain. Porter also announced that he no longer supports Bitcoin Core. Another Bitcoin diehard, Jason Hughes, said he �may walk away from the Bitcoin industry.�
Conclusion
The Bitcoin OP_RETURN function�s update is set to go live in October 2025 despite a section of the Bitcoin Core community lamenting its effects on the network. Updating the Bitcoin Core OP_RETURN function can push dissenters to use other Bitcoin clients like Bitcoin Knot, which has recently been gaining momentum.