Finally: Bitcoin Core Retires OP_RETURN Size Limit, What Does This Mean?

Size of OP_RETURN, an output of Bitcoin ($BTC) transaction, will not be limited to 80 bytes any longer. This upgrade has been debated since 2014. Proponents highlight that it will unlock a new avenue for Bitcoin-based developments, while critics warn that it could damage Bitcoin's ($BTC) economy.

Bitcoin Core: OP_RETURN size limit to be lifted in next release

Bitcoin ($BTC), the largest cryptocurrency, is set to undergo a major transformation of the design of its most mainstream implementation, Bitcoin Core. The size of OP_RETURN, an element of Bitcoin ($BTC) transactions, has gotten rid of the 80-byte limit. Starting from the next Bitcoin Core release, the first blockchain will mine transactions with bugger outputs and and allow any number of these outputs.

The update was announced by Greg Sanders, core developer of BlockStream Bitcoin-centric studio, on his GitHub page. The author opined that the OP_RETURN size limit was designed to protect the network, but it is now failing this mission:

The change re-affirms that Bitcoin is governed by transparent, minimal rules rather than editorial preference. By retiring a deterrent that no longer deters, Bitcoin Core keeps the policy surface lean and lets the fee market arbitrate competing demands.

With bigger OP_RETURN size, developers will be able to embed a larger volume of data into Bitcoin ($BTC) transactions.

Seasoned Bitcoin ($BTC) entrepreneur Samson Mow, JAN3 CEO, highlights that such change would face legitimate criticism from some Bitcoiners:

Many users find this to be an undesirable change for a number of reasons. You can refuse to upgrade and stay on 29.0 or run another implementation like Bitcoin Knots.

The popularity of Luke Dashjr's Bitcoin Knots, an alternative implementation of Bitcoin ($BTC) node software, is already surging, as many network operators are concerned about potential effects of this change.

Bitcoin Knots does not allow processing of nonpayment transactions.

What is OP_RETURN and why is its limit change crucial for Bitcoin Core?

Simply put, OP_RETURN limit size indicates how much data can be embedded into a Bitcoin ($BTC) transaction. For standard ones - like payment transfers - the limit is regular. However, more data-heavy use cases are censored by the existing limit.

As such, the Bitcoin ($BTC) network will process a greater amount of data. On the one hand, it would open new opportunities for Bitcoin ($BTC) DeFis and NFTs.

On the other hand, it might destroy the monetary status of Bitcoin ($BTC), making it yet another altcoin, critics say.

The debate about the OP_RETURN size limit has an 11-year history.