Bitcoin Core v30 vs Knots: What’s Really at Stake

With a market cap of $2.25 trillion, Bitcoin is the world’s largest cryptocurrency.

It is also the 8th largest asset in the world by market capitalization, worth more than Meta (META ) but less than Amazon (AMZN ), Apple (AAPL ), Microsoft (MSFT ), Alphabet (GOOG ), and Nvidia (NVDA ). And with bullion sitting at the top spot with a $26 trillion market cap, digital gold has a long way to go.

Gold is currently worth $3,837 per ounce, a new high for the traditional safe haven, up 137% in the last three years.

Even silver is enjoying a strong upside, up 66% in less than six months and now trading above $46.55, a level last seen fourteen years ago. This strong performance has Silver capturing the 6th spot, becoming more valuable than Bitcoin.

Bitcoin, meanwhile, is up 22.3% this year so far and has increased by 600% in the last three years, when it hit its low during the bear market. As of writing (Sept. 30, 2025), BTC trades around ~$113,000—about 8.5% below its all-time high near $124,000 set in mid-August 2025.

This price action reflects strong demand for BTC among institutions, which have invested tens of billions of dollars in the asset through Bitcoin Spot ETFs. ETF issuers collectively hold $150.4 bln in net assets.

Besides institutional money flow, corporate treasuries are also increasingly adopting Bitcoin to strengthen their balance sheet and protect their capital from inflation. Even governments are exploring it as a reserve asset.

Amidst this growing traction, Bitcoin is preparing for a big month ahead. September hasn’t been a good month, though BTC price still managed to record a positive performance of 5.26% following a 6.5% decline in the prior month. Now, we are heading into October, which has historically been a green month, during which Bitcoin has posted an average return of 21.89%. In fact, 10 out of 12 times since 2013, BTC has enjoyed an uptrend.

But that’s not the only reason why October marks a pivotal month for the digital asset.

Bitcoin is preparing for an update, Core v30,  that has caused friction among its developers. It has actually reopened a long-standing conflict about the operation of the Bitcoin network.

Expanding Data Limits Rekindle Old Debates

Scheduled to roll out in October, Core v30 is the upcoming release of Bitcoin Core, the network’s reference software client.

While software updates are common, this one introduces a strongly opposed change: increasing the OP_RETURN limit. This allows transactions to include a large amount of data, such as files, messages, or proofs, that nodes will relay and accept.

Note: this is a relay policy change, not a consensus rule. Miners and node operators can still run stricter local policies.

The OP_RETURN is used to mark a transaction output as invalid. This special data storage function allows users to include arbitrary data in blockchain transactions and broadcast them to the entire network.

It is a standard script opcode that usually creates unspendable and verifiable output on the blockchain. Bitcoin’s code is written in the programming language Script, and operation codes or opcodes are instructions used to set conditions for a transaction to execute under a given command.

The OP_RETURN function was introduced in the 0.9.0 client version as a compromise to allow users to attach additional information in Bitcoin transactions, thus storing data permanently.

“This change is not an endorsement of storing data in the blockchain. The OP_RETURN change creates a provably-prunable output, to avoid data storage schemes – some of which were already deployed – that were storing arbitrary data such as images as forever-unspendable TX outputs, bloating bitcoin’s UTXO database. Storing arbitrary data in the blockchain is still a bad idea,” reads the official documentation, adding that it is far more cost-effective and efficient to store non-currency data elsewhere.

When first introduced, the initial limit on data that could be attached was a mere 40 bytes, which was doubled in 2015 and then increased slightly more to 83 bytes in 2016. These extremely small increments were meant to encourage the use of hashes rather than raw data.

In April this year, Bitcoin Core developer Peter Todd proposed increasing the cap on OP_RETURN to 4 MB. On June 6, Bitcoin Core developers published a statement, which didn’t mention the term OP_RETURN, but it did signal a change in relay policy.

Bitcoin Core developers then decided to expand the limit in client release v30, which is now scheduled for October. With v30’s default policy, nodes will no longer filter OP_RETURN outputs that exceed ~80/83 bytes; operators can still enforce local limits.

By expanding the amount of data that can be stored in it, OP_RETURN can be utilized more efficiently to preserve important documents, create NFTs, and include off-chain state information of L2s.

While the debate surrounding extending the limit of OP_RETURN has intensified this year, especially in the last couple of weeks, it isn’t anything new and has long been debated, since its early days, actually.

As BitMEX Research noted, the debate about arbitrary data in the blockchain first happened in December 2010 on the BitcoinTalk forum.

When Bitcoin’s pseudonymous creator, Satoshi Nakamoto, released version 0.3.18, which included a standardness check to only include known transaction types, it raised concerns that it would prevent the blockchain from storing arbitrary data.

Miners, it was argued, wouldn’t care about this because they want to maximize fee revenue, and as such, the standardness check should be removed.

Calling this “Bitcoin’s coming of age,” Christian Decker, researcher at blockchain technology company Blockstream, said that the release marked the first dispute.

Developer Jeff Garzik suggested people start their own chain rather than including “non-currency data” in the blockchain, concerned that this would price out those who want to use BTC as money.

Satoshi came back to the discussion to state that new transaction types can be added as needed. He also said that things could change within a few days, and people didn’t need to worry about the new client not relaying unknown transaction types.

Software developer Gavin Andresen then shared that he had already suggested to Satoshi that instead of blacklisting transaction types, acceptable transaction types could be whitelisted, to which Satoshi replied that he agreed with it.

Gavin was also open to “arbitrary data,” though, and Satoshi also expressed support for “hash sized arbitrary data” and said that this could already be done.

While some shared concern about allowing arbitrary data potentially leading to “kiddie porn” on-chain and that the government would then see it in a different light, others countered that this kind of abuse just can’t be “completely” prevented. Now, Bitcoin developers are at it again.

The Case For and Against OP_RETURN Expansion

Currently, there is a heated debate going on around OP_RETURN expansion.

Its supporters argue that it is a safer means of adding extra data to Bitcoin without clogging up the system. With the latest technical upgrade, they aim to unlock new use cases for embedding data on Bitcoin’s blockchain that take it beyond simple transactions.

“The op return limit is irrational and should be removed,” said Paul Sztorc, founder and CEO of LayerTwo Labs. In his X post, he noted that all “standardness” rules are conceptually problematic because they are based on the “false” idea that either miners prefer less money, or nodes prefer to be in the dark about what is happening on the network.

“Whoever pays for block space is ****the rightful owner**** and can put whatever bytes they want,” said Sztorc, adding, “it is good when people use Bitcoin.”

Meanwhile, critics argue that it risks pushing Bitcoin away from its core purpose of serving as a medium of exchange. They believe it should focus on being a digital gold and not a general data-storage platform.

Also, the more data is included, the bigger the blockchain size, in turn, increasing the hardware requirements for a node. Moreover, the changes may lead to abuse, such as spam, they argue.

By changing how mempool processes arbitrary data, critics say, this could make it easier for bad actors to use it for nefarious purposes, such as storing illicit material. This way, the critics argue, changing OP_RETURN data limits in v30 threatens Bitcoin’s role as sound money.

Leading the opposition is the long-standing Bitcoin developer Luke Dashjr, who’s the lead maintainer of Bitcoin Knots.

Dashjr has long been advocating for stricter relay rules. Back in 2023, when Bitcoin NFT project Ordinals caused a massive spike in transaction fees and blockchain congestion, Dashjr asked other developers and miners to implement “spam filtration” to block Ordinals, Inscriptions, and BRC-20 tokens, which he sees essentially as DoS attacks.

Many support Dashjr’s stance, wanting Bitcoin to remain accessible and affordable in order to continue performing its main function of transferring value. Many more, however, oppose Dashjr’s proposed changes, arguing that they will undermine Bitcoin’s permissionless nature.

Blockstream co-founder and CEO Adam Back has warned that selective filtering, deletion, or moderation can set a dangerous precedent. This could essentially make Bitcoin vulnerable to censorship.

Recently, leaked messages alleged that Dashjr is backing a Bitcoin hard fork to tackle the issue of illegal data being stored on the Bitcoin blockchain. The controversial Bitcoin Core contributor, however, has denied leading such actions.

This comes after a report by TheRage, which referenced allegedly leaked conversations implying that Dashjr is considering a temporary hard fork in response to the Bitcoin Core v30 (v30) release. As per the report, the developer is proposing a multisig quorum that gives a group of people the ability to review transactions and then retroactively alter data that is hosted on the blockchain.

Udi Wertheimer, the co-founder of the Ordinals project Taproot Wizards, came in support of Dashjr, saying he was simply discussing a “hypothetical mechanism that would allow Knots node operators to avoid downloading ‘spam’ that’s already in blocks.”

Meanwhile, according to the leading Bitcoin developer Back, Dashjr’s mining pool, Ocean Mining, has already been encouraging other pools to moderate blockchain data.

Besides his intentions, the Bitcoin community is also concerned about Bitcoin Knots now making up over 20% of the total Bitcoin network, which signals an increasing interest in and backing for Dashjr’s anti-spam measures.

Why Bitcoin Knots Adoption Is Surging (vs. Bitcoin Core)

Bitcoin developer Dashjr’s Bitcoin Knots is a fork of Bitcoin Core, which is the reference implementation for the Bitcoin source code.

Bitcoin Core was created by Satoshi, but since then, many upgrades have been added to it. Being an open source project, anyone can edit it by publishing and proposing the changes they want. It provides software for a node as well as a wallet.

A Bitcoin node is a computer connected to the Bitcoin network that is running the Bitcoin software. It stores and validates transactions and blocks, ensuring the integrity and security of the blockchain without a central authority.

By running a node, a user enforces the rules of the network. A full node independently verifies the state of the Bitcoin blockchain by downloading every block and transaction and checking them against consensus rules to approve or reject the transaction. By independently verifying the network state, a user can use it to verify Bitcoin’s supply and prevent BTC’s double-spending.

In today’s world, not many are running their own full nodes, though. The number of users running full nodes is actually decreasing due to the constantly growing size of the blockchain ledger, which requires an increasing amount of storage. Not to mention, setting up and maintaining a full node is technically challenging. By increasing reliance on fewer, potentially centralized, nodes, this threatens network decentralization and security.

“Bitcoin’s greatest threat to survival is that far too few people are using a full node. For Bitcoin to work, at least 85% of economic activity needs to do so. As a result, Bitcoin is _likely_ going to fail already,” said Dashjr, pointing out the fundamental issue surrounding the network’s true decentralization.

Now, his Bitcoin Knots is a specialized version of Bitcoin Core, which is fully compatible with the Bitcoin network. It offers an alternative client software with the same rules but with more features and, more importantly, tighter policy defaults.

Unlike Bitcoin Core, which has always allowed non-financial data on the blockchain, Bitcoin Knots implements several restrictions. For instance, it blocks transactions having content like Ordinals inscriptions and Runes tokens.

The fully verifying implementation of Bitcoin, per its website, aims to be the best possible Bitcoin full node for both newbies and power users, for miners, users, and businesses.

First released in the early 2010s, Bitcoin Knots offers alternative Bitcoin nodes with a conservative OP_RETURN cap. Most nodes use the Bitcoin Core client, but Bitcoin Knots have been seeing an impressive growth this year, with its nodes increasing from fewer than 400 to now surpassing 4,900.

This uptick mainly began in May as node operators began increasingly migrating from Core to Knots. Ahead of the update, the share of public nodes running Knots has reached 20.7%, up from under 10% in June.

This is all very sudden for Knots, which, between 2016 and early 2022, had a node count of about 200. But then the surge of Bitcoin-based inscriptions and BRC-20 tokens helped it surpass 1,000 briefly.

At the time, Dashjr wrote in a post on X:

“Bitcoin Core has, since 2013, allowed users to set a limit on the size of extra data in transactions they relay or mine (`-datacarriersize`). By obfuscating their data as program code, Inscriptions bypass this limit. This bug was recently fixed in Bitcoin Knots v25.1.”

As OP_RETURN expansion plans started making rounds late last year, Knots’ adoption accelerated. This suggests that a growing number of operators are now interested in Dashjr’s approach and not as trusting in Bitcoin Core’s authority to define the network’s limits.

The rising share of Dashjr’s node has some concerned about a possible network division, the biggest since the 2017 hard fork. There is no hard fork yet, but tensions are growing.
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Uncertainty on the Horizon

If we look at the discourse surrounding v30 from the market perspective, one way to anticipate the reactions is by examining the past.

The ongoing OP_RETURN expansion debate, after all, echoes the 2017 block size war. At the time, the ideological divide was whether low fees and fast payments should be prioritized by Bitcoin, with big blocks, or small blocks should be kept for decentralization and security.

Could Bitcoin Core v30 Trigger a Fork?

The possibility of transactions being rejected by different software clients is also reminiscent of the SegWit split.

So, what happened when disagreements over block size split the network into Bitcoin and Bitcoin Cash (BCH ) in August 2017 was that the Bitcoin price dropped less than 6% on the day of the fork, only to surge about 49% that month.

While the current debate is unlikely to result in a fork, at least not in the immediate future, the upcoming update does bring an element of uncertainty, and that can certainly translate into volatility. But the strong and continuing institutional adoption and inflow is expected to provide a counterforce, cushioning not only downside risks but also providing confidence in Bitcoin’s long-term value.

The ongoing discussion around v30 is more likely to influence Bitcoin’s long-term trajectory.

Bitcoin is the world’s first decentralized digital currency, and its value proposition is tied to its immutability and resilience. And fundamental disagreements among the community over the protocol’s future can challenge this perception, thus undermining investor confidence in the Bitcoin network’s governance and scalability.

But at the same time, such disputes highlight the strength of Bitcoin’s decentralized ethos, where no single entity decides the direction of the protocol, but rather consensus must be reached among a diverse set of stakeholders, making Bitcoin more adaptable, trustworthy, and secure.

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