Understanding OP_RETURN in Bitcoin Core V30

By: Eva Baxter

The recent Bitcoin Core v30 update has introduced a significant change to the OP_RETURN function, igniting a debate within the Bitcoin community. This update increases the OP_RETURN data limit from 80 bytes to an impressive 100,000 bytes, allowing users to embed a larger amount of non-financial data within Bitcoin transactions. Such data could include metadata like text, images, or digital signatures without affecting the functional cash transactions of Bitcoin.

This change enhances on-chain experimentation, enabling more complex data structures, like NFT-style inscriptions and application metadata, to be supported natively by node operators running the v30 update without needing complex configurations. The increase in the OP_RETURN capacity stands to potentially expand Bitcoin's utility beyond just cryptocurrency transactions, facilitating more intricate blockchain-based applications and services.

However, the expansion has also attracted criticism due to the potential for blockchain bloat and increased transaction fees should users abuse this feature by embedding large datasets. Critics worry that these changes may lead to spam outputs on the blockchain, complicating transaction processes and driving up operational costs for Bitcoin users. The update also introduces optional encrypted connections between nodes, enhancing privacy but potentially increasing network complexity.

As the discussion continues, proposals like OP_Return2 aim to offer a middle ground by permitting commitments to external data hashes within transactions, thereby minimizing data storage demands on full nodes. This change also raises questions about balancing innovation and performance limits within the Bitcoin network and the broader implications for cryptocurrency ecosystems.

For more insights, explore related discussions and analyses in the detailed news article.