Reads: Bitcoin Is Fighting With Itself Again - The Great Data War of 2026

The Great Data War of 2026: Why Bitcoin's "Civil War" Is Actually Proof It's Working

Bitcoin is having another one of its famous arguments. And if you're new here, you might think the sky has fallen. It isn't.

What's being called the Data War is the latest flashpoint in a debate that's been simmering since Casey Rodarmor launched the Ordinals project in 2023, essentially using a loophole opened by Taproot to inscribe arbitrary data directly onto individual satoshis.

That gave us Bitcoin NFTs, BRC-20 tokens, and a community-wide argument about what Bitcoin is actually for.
Bitcoin Well Reads: The Great Data War of 2026: Why Bitcoin's "Civil War" Is Actually Proof It's Working

Now in 2026, those opinions have hardened into two camps: Bitcoin Knots and Bitcoin Core. In this episode, Zach breaks down both sides without taking one, explains why this isn't like 2017, and makes the case that Bitcoin's resistance to change isn't a bug; it's the most important feature.
Topics covered: Ordinals and inscriptions explained, BIP110 soft fork proposal, Bitcoin Knots vs Bitcoin Core, why the 2026 debate is structurally different from the block size wars, the philosophical tension between permissionlessness and monetary purity, and what being your own bank actually looks like.

CHAPTERS
0:00 Intro — America, Iran, and why Zach holds Bitcoin
1:03 What is the Data War?
2:31 The two sides: Purists vs Neutralists
3:37 Bitcoin Knots and BIP110 explained
4:18 Bitcoin Core's counterargument
5:02 Why this isn't like 2017
6:04 Soft fork vs hard fork — the structural difference
7:10 The philosophical tension nobody talks about enough
8:17 Are inscriptions just a fad?
9:06 Bitcoin has survived everything — and gotten stronger
9:46 What this debate actually proves about decentralization
10:08 Run your node. Know your client. This is what sovereignty looks like.

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Transcript

SPEAKER_00 0:02

Hello, World Wide Web. This is Zach, and you are listening to Reads on the Bitcoin Well podcast channel. I hope everyone is doing well out there. America and Israel are still at war with Iran, and most people still don't support it. Not that that makes any difference in the decision of politicians, but that's why I hold as much Bitcoin and as few dollars as I can. Speaking of which, if you want to hear a great discussion about the war and the overall landscape of Bitcoin and stable coins, check out the recent spaces we did with the Peruvium Bull. It's on our podcast feed as Iran hyperinflation and stablecoins has the dollar endgame begun. And while unplugging new content, if you're trying to orange pill your friends and need a simple explainer for what Bitcoin is and how to set up your first wallet, check out our new video called How to Buy Bitcoin and Store It Safely on YouTube.com slash at BitcoinWell. Now speaking of wars, today's reads is on a controversial topic. Often called the Spam Wars, or as we've dubbed it, the data wars, two camps are forming in Bitcoin about how to deal with the data being put into the blockchain that isn't just transaction data. Now we've seen this before in Bitcoin and crypto in general. Think crypto kitties or NFTs being shoved into Bitcoin. But this time, core developers have changed Bitcoin's code to make it easier to do, which has prompted many users to follow a new implementation of Bitcoin's code called NOT to block these types of transactions by default. We've done our best to break down the issue in layman's terms and not to take sides. So before I get too far into the weeds trying to explain it, let's just jump into the article in hand and let you decide for yourself what the future of Bitcoin should be. Please email any questions, concerns, or ideas or hate that this article generates if I get your side wrong in this debate to z.adare at bitcoinwell.com. That's z.add ar at bitcoinwell.com. And as always, have a great week, guys. Enjoy the show. It's working by Zachary Adair. Bitcoin is having another one of its famous arguments. And if you're new here, you might think the sky is falling. It isn't. What's being called the data war is the latest flashpoint in a debate that's been simmering since Casey Rodarmer launched the Ordinals project in early 2023, essentially using a loophole opened by Taproot to inscribe arbitrary data like images, text, full JPEGs of cartoon monkeys directly onto individual Satoshis. That gave us Bitcoin NFTs, then BRC20 tokens, then a community-wide argument about what Bitcoin is actually for. Now in 2026, those opinions have hardened into two camps: a competing client implementation and a proposed soft fork. Let me break this down. So the two sides, first you have the purists. They fly under the banner of Bitcoin Knotts and developer Luke Dasher. They want to filter non-monetary data from the blockchain. Their proposed BIP 110 is a temporary one-year soft fork to cap transaction data. Knotts has quietly grown to over 20% of reachable nodes. That's not nothing. Their argument is principled. Bitcoin's block space is a scarce public resource secured by proof of work. And using it as a cheap data warehouse for JPEGs is parasitic. Keep the chain lean, keep node costs low, keep Bitcoin monetary. The other side, the neutralists, are represented by Bitcoin Core, which went the opposite direction in version 30 of Core by removing long-standing OP-turn data limits. Their argument, spam is a subjective label with no objective definition in a permissionless protocol. If a transaction follows consensus rules and pays a competitive fee, it's valid. Full stop. There's also a harder economic argument underneath this, as the block subsidy continues to have, minor revenue increasingly depends on fees. Ordinal-driven fee pressure isn't pollution. It might be part of a long-term security budget. Both arguments are serious and neither side is stupid. This is what genuine intellectual tension looks like inside a decentralized system. Why I don't think this is like 2017. You see, the comparison to the block size war gets thrown around a lot right now. Understandable. The social media temperature feels similar, but the structural dynamics are fundamentally different, and that distinction matters. In 2017, we weren't debating policy, we were fighting over whether large corporations, bitmain, major exchanges, VC-backed startups could effectively hijack the protocol through a hard fork, SegWit 2X, without genuine user consensus. They tried and they failed. Bitcoin Cash was born as the consolation prize for the losing side as it forked off of Bitcoin, and Bitcoin only got stronger in the clarity that followed. The 2026 debate is different in three important ways. One, soft fork, it's a soft fork, not a hard fork. BIP 110 has an activation threshold of 55%. If it doesn't get there, nothing changes. The network doesn't split. Bitcoin keeps producing blocks every 10 minutes. The immune system is working exactly as designed. Both sides want the same chain to win. In 2017, big blockers genuinely wanted a different Bitcoin, one optimized for throughput over decentralization. Today, purists and neutralists both want this Bitcoin to succeed. They're arguing about the cleanliness of the ledger, not the fundamental rules of the game. Miners are economically constrained in a good way. In 2017, minor incentives were dangerously misaligned with users. Today, miners love ordinal fees, but also understand that destabilizing a network destroys the very asset that makes those fees worth collecting. The economic check is a real constraint on radicalism from either side. Here's the philosophical tension that doesn't get discussed enough. Bitcoin's permissionlessness is one of its core value propositions. The whole point is that no one gets to decide what a legitimate transaction is. That's what makes it censorship-resistant money. That's what makes it useful to a dissident in a totalitarian state, a merchant in a currency collapsing economy, or anyone who just wants to transact without asking permission. The moment you introduce a filter, even a well-intentioned one, you're making a subjective judgment about valid use. And subjective judgments have a way of expanding over time. That's a legitimate concern. It's also why BIP 110 is designed as a temporary soft fork rather than a permanent rule change. Its proponents understand the philosophical weight of what they're proposing. On the other hand, there's a real argument that a blockchain stuffed with speculative JPEG data undermines the monetary utility that makes Bitcoin worth securing in the first place. Mises would recognize the problem. Misaligned incentives at the margin can corrupt the core function of an institution over time. The block space is not infinite. The question of what fills it isn't trivial. For what it's worth, I think inscriptions are a fad. We've seen this before. CryptoKitties clogged Ethereum in 2017. Everyone declared it the future of the blockchain, and then it quietly disappeared. The NFTs did the same thing in 2021. Billions in digital ownership, celebrity drops, profile picture projects, and now most of those collections are worth pennies on the dollar. The market has a way of moving on. The question is whether the protocol makes permanent accommodations for something that may not deserve them. Bitcoin has been declared dead over 500 times. It survived the collapse of Mt. Gox, the block size wars, multiple regulatory crackdowns, and more than one this is the end moment that turned out to be just the beginning. What each of these moments revealed once the dust settled was that Bitcoin's resistance to change isn't a bug. It's the most important feature. The fact that BIP 110 might not reach 55% isn't a failure of governance, it's governance working. No single developer, company, or vocal minority gets to decide the future of the protocol unilaterally. That's by design. That's the whole point. Whether Bitcoin remains a pure monetary rail or gradually absorbs a data layer function, the decision will be made by nodes, miners, and users operating in their own self-interest, not by a committee, not by a government, and definitely not by whoever is loudest on social media this week. Run your own node, understand what client you're running, know the difference between knots and core, and why it matters. This is what being your own bank actually looks like, not just holding the keys, but participating in the network that makes those keys mean something. And while you're at it, ignore the noise, the infighting, the Twitter wars, the your side is killing Bitcoin discourse. Bitcoiners are going to disagree. That's not a crack in the foundation. That's the foundation. A decentralized system doesn't produce consensus by silencing dissent, it produces it by letting every idea compete on its own merits. Different clients, different proposals, different philosophies. All of it is the process working. The moment everyone agrees on everything is the moment you should start worrying. In the meantime, the blocks keep coming every 10 minutes, and they don't care about the argument.