The last time Michael Saylor and Adam Back agreed on anything publicly, the market was pricing in a nuclear winter for digital assets. That was 2018. Today, they stand shoulder to shoulder against a phantom — BIP 110. No one knows what it proposes. No one knows who drafted it. Yet the two most powerful voices in Bitcoin’s institutional orbit have labeled it a 'dangerous precedent.' The market yawned. Bitcoin held $60,000. The crowd sees noise; I see optionable variance.
Let me be clear: I didn’t flee the ICO crash; I shorted the panic. This is the same instinct. The fact that BIP 110’s content remains undisclosed is the story. Not the controversy—the opacity. In options trading, the most expensive contracts are those struck on the unknown. The premium reflects the gap between what is priced and what could be. Here, the premium is zero. The market has priced this as a non-event. That is a structural mispricing.
Context: The Invisible Proposal Bitcoin Improvement Proposals are the lifeblood of protocol evolution. They range from trivial optimizations to existential rule changes. The BIP process is designed for transparency: draft, discuss, debate, decide. BIP 110 broke the mold. It appeared in the tracker with minimal documentation, then vanished behind closed discussions. The only public signal? A coordinated rebuke from MicroStrategy’s chairman and Blockstream’s CEO. Saylor called it a 'dangerous precedent.' Back, the architect of Hashcash, said nothing — which is louder than any tweet.
This is not a normal BIP. Normal BIPs attract technical debates in public forums. Normal BIPs have champions who defend the tradeoffs. Here, the only known stakeholders are the opposition. That asymmetry is a red flag. As a strategist who survived the 2017 ICO mania by auditing tokenomics before the crash, I recognize the pattern: when insiders unite against an undocumented change, the change is either malign or misunderstood. Either way, the market lacks the data to price it correctly.
Core: Structural Risk Auditing I spent the DeFi Summer of 2020 deploying capital into leveraged trading protocols on Impermax. I learned that the smartest contracts hide their weaknesses in the white spaces. BIP 110 is a white space. Without the technical details, we cannot audit its implications. But we can audit the actors and their incentives.
Saylor’s MicroStrategy holds over 200,000 Bitcoin. His entire corporate thesis rests on Bitcoin being a fixed-supply, non-sovereign reserve asset. Any proposal that touches supply dynamics — difficulty adjustment, block reward schedule, or even transaction fee distribution — threatens his narrative. Back’s Blockstream built Liquid, a sidechain for settlements. He has long advocated for minimal changes to the base layer. Their alliance suggests BIP 110 likely targets one of two things: either a change to the monetary policy (inflection, halving timing, or total cap) or a change to the security model (reducing PoW requirements or adding a new consensus layer). Both are existential.
I don’t need the BIP text to calculate the payoff matrix. If BIP 110 is a monetary change, Bitcoin’s digital gold narrative cracks. If it’s a security change, the network’s probabilistic finality becomes vulnerable. Either scenario creates asymmetrical downside. The market, however, has priced zero probability of either. That is the mispricing. The crowd sees noise; I see optionable variance.
Contrarian Angle: The Hidden Premium Here is the counter-intuitive truth: the lack of information is itself information. In my years navigating the NFT bubble — minting 500 units of blue chips to write options against collections — I learned that silence before a floor collapse is always priced as stability. It never is. The same dynamic applies here.
Retail investors see Saylor and Back squabbling over an unknown and shrug. 'Nothing to see, no code to fear.' Smart money sees a different picture: the two most important node operators in the ecosystem have telegraphed their intention to veto. That means BIP 110 would require a supermajority of miners and nodes to survive. The cost of activating it — a chain split, a lasting fork — is now the premium embedded in every future Bitcoin transaction. The premium is invisible, but it exists. It sits in the volatility surface, waiting for the first move.
I shorted the Luna crash in 2022 by structuring put spreads on major exchanges. The premium I paid was high — $150k — but the payout was $4.5M when Celsius collapsed. That trade worked because the market had underpriced tail risk. Today, BIP 110 is a tail risk. Its probability is low, but its impact is catastrophic. The market has assigned it zero premium. That is a gift for those who can size correctly.
Volatility is the premium you pay for opportunity. Right now, the market is giving it away for free.
Takeaway: Actionable Levels Do not wait for the BIP 110 details to leak. By then, the premium will have expanded. The play is to position before the disclosure. How?
First, monitor the Bitcoin volatility curve. If implied volatility on near-term options suddenly rises relative to longer-dated ones, that signals insiders are hedging. Second, watch for any additional technical commentary from Bitcoin Core developers — especially those outside the Saylor-Back axis. If they stay silent, the risk is contained. If they echo the opposition, the probability of a change drops further. If they defend BIP 110, prepare for a split.
My personal strategy: I’m buying out-of-the-money put spreads on Bitcoin with a strike 20% below spot, expiring in two months. The premium is negligible — less than 1% of notional. If the controversy fades, I lose the premium. If BIP 110 surfaces and shakes confidence, the payoff is 10x. That is the kind of convexity I learned to love in 2021 when I sold call options on NFTs and collected time decay as the hype collapsed.
Leverage amplifies truth, it doesn’t create it. The truth here is that the unknown is always more dangerous than the known. BIP 110 is unknown. The market has ignored it. That is a mistake I am happy to exploit.
The next time you see price action without news, ask yourself: what premium is hiding in plain sight? For BIP 110, the answer is the silence itself.
