Bitcoin Fork Proposal Sparks Legal Threat Debate

A new Bitcoin improvement proposal for a soft fork has sparked outrage on X over a section that some claim is threatening legal consequences for those who reject the fork. 

The proposal, created by core developer Luke Dashjr and published on Friday, is the latest salvo in the recent Bitcoin Core vs Knots debate, which revolves around what Bitcoin should be used for and whether non-financial transactions should be filtered out. 

The proposal aims to restrict data in Bitcoin (BTC) transactions through a one-year soft fork while a more permanent solution is devised, addressing concerns that bad actors can embed illegal and immoral content into the blockchain following the Bitcoin Core v30 update.

However, under the improvement proposal, the developers have written on line 261 that “there is a moral and legal impediment to any attempt to reject this soft fork.”

Then starting on line 270 and continuing to line 272, the developers go into further detail, “rejecting this soft fork may subject you to legal or moral consequences, or could result in you splitting off to a new altcoin like Bcash. However, strictly speaking, you are free to choose.”

Some have called it a legal threat

Bitcoin, the first cryptocurrency, was designed to disrupt traditional financial institutions and empower individuals. Critics of the proposal believe any form of censorship or restricting data sizes contradicts Bitcoin’s core principle of permissionless use. 

In a post on Sunday, a user with the handle Bam, the founder of a Bitcoin education resource and systems engineer, called the wording “Orwellian,” a reference to the writings of George Orwell, an author who depicted a future totalitarian state in his book 1984. 

Ben Kaufman, a coder and software engineer, said a “fork under the threat of legal consequences is the most clear case of an attack on Bitcoin.”

Canadian cryptographer and computer scientist Peter Todd also weighed in with a screenshot of Dashjr, saying it’s “clear he expects his soft-fork to get adopted due to legal threats.”

Galaxy Digital’s Alex Thorn commented on Todd’s post and agreed it’s “explicitly an attack on Bitcoin, however, it’s also incredibly stupid.”

Some also warned that if miners and users split over activation, the network could face a chain split.

Others think it’s been misinterpreted

Users have long been able to embed messages onchain; the recent Bitcoin Core v30 update allows much larger data payloads, which the proposal claims has opened the door for anyone participating in the network to be criminally liable if the content posted in the transactions is illegal.

Some X users argue that this liability is what the proposal is referencing, specifically that failure to adopt the fork could result in illicit content on the blockchain, which could lead to legal or moral consequences.

Dashjr also appeared to support this argument in the comments of a user who claimed it’s illegal to reject the soft fork, posting that it “doesn’t say that. Maybe you can propose a clarification if you think it’s unclear.”

“May isn’t certainly. Also, for some context, I believe this part originated in an earlier draft, which didn’t have the proactive activation (ie, the opposing chain would definitely include CSAM) — so it would probably make sense to add clarification,” he added. 

Soft fork might be irrelevant anyway

The proposal for the soft fork is already on track with no technical objections, according to Dashjr.

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However, Todd may have already found a way to exploit the fix in the proposal. He claims to have recorded a transaction containing the entire text of the proposed fork that is “100% standard and fully compatible” with the improvement proposal. 

Meanwhile, BitMEX Research stated that a malicious actor seeking to conduct a double-spend attack could place illegal content onchain to “trigger a re-org and succeed with their attack,” thereby creating an “economic incentive” to place unlawful content onchain.

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