David Schwartz, the architect behind XRP Ledger's consensus mechanism, took aim at Bitcoin's 'Spam Purists' last week. His weapon: the ghost of BIP-110. 'It failed,' he declared, implying that Bitcoin's governance is broken. A technical claim wrapped in a narrative. But the blockchain remembers; the architect forgets.
He is not wrong about the existence of a faction. The 'Spam Purists'—a loose coalition of developers and ideologues—argue that Bitcoin's block space should be reserved for financial transactions. Non-financial data, from text messages to JPEGs, is considered spam. They have been vocal since the Ordinals protocol enabled inscriptions on the Bitcoin blockchain in 2023. The fee spike that followed was real. The UTXO set growth was measurable. But the governance response was typical Bitcoin: slow, contested, and inconclusive.
BIP-110, as referenced by Schwartz, is a curious choice. According to the official Bitcoin Improvement Proposal repository, BIP-110 was a proposal for 'Time-based Transaction Relaying'—a mechanism to prevent high-fee transactions from being considered for replacement. It was not a spam filter. It was never formally rejected. It simply never reached rough consensus. The narrative of 'failure' is a convenient framing, but the blockchain remembers the actual content. The data is immutable. The interpretation is not.
This is the context for the core of this analysis: a systematic teardown of the claims, the incentives, and the real governance dysfunction that both sides exploit.
The BIP-110 Riddle: What Actually Failed?
The first step is to establish what BIP-110 was. I pulled the BIPs repository from GitHub. BIP-110, authored by Alex Morcos in 2015, proposed a change to the transaction relay policy: nodes would not consider replacing a transaction with a higher-fee one if the original transaction was created with a future locktime. In plain English, it aimed to prevent a specific type of fee manipulation. It was a technical refinement, not a philosophical statement about block space usage.
It was never merged into Bitcoin Core. But that is not a failure. The BIP process is a proposal taxonomy, not a legislative pipeline. Most BIPs never get activated. According to the BIP index, only 48 out of over 400 proposals have been implemented as of 2025. A 12% success rate. By that metric, Bitcoin's governance is a high-entropy system where most ideas die. But that is by design. The system is conservative to protect the $1.2 trillion network.
Schwartz's framing—'BIP-110 failed'—implies a decisive rejection. But the historical record shows no such vote. There was no consensus against it; there was simply no consensus for it. The distinction matters. In my 2017 ICO audit, I flagged a critical overflow vulnerability. The team ignored it. They launched. The exploit drained 40% of the treasury. That was a failure. BIP-110's non-activation is not a failure; it is the normal operation of a decentralized governance system that prioritizes caution over speed.
The Spam Purists' Case: Security vs. Innovation
The 'Spam Purists' are not anti-innovation. They are pro-security. Their argument is grounded in the technical reality of the UTXO model. Each transaction, whether financial or non-financial, consumes bytes. Large inscriptions—some exceeding 100 KB—bloat the UTXO set. The Bitcoin Core developers have warned that this could increase the resource requirements for running a full node. A higher barrier to entry reduces decentralization. The purists say: protect the base layer. Let applications build on L2.
I have seen this pattern before. In 2020, I analyzed a DeFi protocol that claimed to be 'oracle-agnostic.' My risk model showed it was vulnerable to price manipulation during low-liquidity periods. I published a technical breakdown. The community dismissed me as a bear. Three days later, a $10 million flash loan attack exploited that exact vector. The purists may be early, but they are not wrong. The blockchain remembers the data; the market forgets the warnings.
On-chain data supports the purist concern. The number of UTXOs has grown from 80 million in January 2023 to over 150 million by mid-2025. Inscriptions account for a significant portion. The median fee per transaction has also increased, pricing out small-value transfers. The purists have a point, but their solution—protocol-level filtering—is a cure worse than the disease. Filtering non-financial transactions requires a subjective definition of 'spam.' That opens the door to censorship. The blockchain cannot enforce morality; it can only enforce math.
Schwartz's Self-Interest: The Competitive Narrative
David Schwartz is not an unbiased observer. He was the Chief Technology Officer of Ripple, the company behind XRP Ledger, for over a decade. He is now CTO Emeritus, but his fingerprints are all over the XRP Ledger's design. XRP Ledger uses a federated consensus model, not proof-of-work. It is fast, cheap, and governed by a set of 'validators' that are largely controlled by the Ripple company and its partners. The governance model is efficient but centralized.
Schwartz's criticism of Bitcoin's slow, contentious process serves to reinforce the XRP Ledger's narrative: 'We iterate quickly. We adapt to business needs. Bitcoin is stuck in ideological debates.' It is a classic competitive positioning. I have seen this before. In 2021, I investigated an NFT collection with a $200 million market cap. A single wallet cluster controlled 15% of the supply. They were creating artificial volume to inflate the floor price. I published the on-chain evidence. The collection's value dropped 60% in 48 hours. The project's legal team threatened me. I ignored them. The data was accurate. The blockchain remembers.
Schwartz's statement is a similar narrative weapon. It is not intended to inform; it is intended to position XRP Ledger as the pragmatic alternative. The question is not whether he is wrong—he is technically correct that Bitcoin's governance is slow—but whether that slowness is a bug or a feature.
The Real Governance Failure: The Absence of Resolution
The real failure is not BIP-110. It is the lack of a mechanism to resolve the ideological dispute between the purists and the pragmatists. Bitcoin has no formal governance. No court. No parliament. The only resolution is through market forces: miners choose which transactions to include, users choose which client to run, and developers choose which pull requests to merge. This is not a bug; it is the system's deliberate design. But it creates a vacuum where narratives thrive.
In 2022, I shorted LUNA before the collapse. My analysis showed that the algorithmic stablecoin model required exponential growth to maintain the peg. The burn-rate data was public. I argued it was a Ponzi scheme. The market ignored the data. The collapse wiped out $40 billion. The blockchain remembered every transaction, but the architects had forgotten the fundamentals.
Bitcoin's governance is slow because it is designed to reject changes that lack overwhelming consensus. That slowness is a shield against catastrophic failures. The trade-off is that it also delays useful improvements. The BIP-110 story is a symptom of this trade-off, not a failure of the system.
Contrarian: What the Bulls Got Right
To be fair to Schwartz and the pragmatist camp, they have a point. Bitcoin's governance can be glacial. The BIP process is gated by a small group of core reviewers who have de facto veto power. This is a form of centralization. The 'cando-purists'—as Schwartz calls them—do have disproportionate influence. A proposal that is technically sound but politically unpopular can be stalled indefinitely. The narrative of 'failure' is often a self-fulfilling prophecy: if a proposal is not adopted within a year, it is labeled as dead, even if it was never formally voted on.
The contrarian insight is that the criticism itself is a healthy check. It forces the community to re-examine its assumptions. In the 2024 Bitcoin ETF institutional filter, I advised three European asset managers on custody solutions. I found that the most secure approach was a hybrid: 20% self-custody, 80% institutional custody. The regulatory pressure was to use fully custodial solutions. I pushed back. The evidence from the custodian hack later that year proved me right. The blockchain remembers; the architect must be willing to forget the comfortable narrative.
Schwartz's statement is a reminder that Bitcoin's governance is not perfect. But the solution is not to abandon the process; it is to improve it. The bulls got it right that the system needs to evolve, but they underestimated the cost of moving too fast.
Takeaway: The Signal in the Noise
The BIP-110 myth will be forgotten in a week. The underlying tension between security and innovation will persist. Investors should watch for real governance signals: node adoption rates, the number of active BIPs under discussion, and the rate of pull requests merged into Bitcoin Core. The narrative is noise; the code is signal. The blockchain remembers every transaction, every proposal, every failure. The architects of both sides must remember that the market does not forgive. The blockchain remembers; the architect forgets. But the data does not lie.