[BIP Proposal] Reduced Data Temporary Softfork

In the realm of Bitcoin development, a significant emphasis is placed on the order in which data is encoded for hashing purposes. This aspect remains the only universally agreed-upon standard within the Bitcoin protocol regarding data handling. It's important to note that the way data is represented in various forms such as in memory, during remote procedure calls (RPC), or on the peer-to-peer (P2P) network, can greatly differ without necessitating any changes to the consensus mechanism itself. In practice, these representations are subject to modification and are not strictly regulated by consensus rules. For instance, it has become common practice to encrypt data when stored on disk or transmitted over the P2P network, further illustrating the flexibility in data handling outside of consensus requirements.

Furthermore, there have been proposals, such as BIP 337 (BIP 337), aimed at introducing new standards or modifications to existing practices. However, many of these proposals do not directly impact the consensus mechanism and, as such, are not subject to the same scrutiny or interoperability concerns that govern changes to the core Bitcoin protocol. This distinction underscores a broader principle within the Bitcoin development community: alterations to how data is encoded for non-consensus layers (e.g., disk storage, memory representation, RPC communications) are generally viewed as preferable to consensus rule changes. Such adjustments offer a more flexible and less invasive means of addressing concerns related to data handling and security.

The preference for changing encoding practices over amending consensus rules reflects a strategic approach within the Bitcoin development ecosystem. Consensus rule changes are seen as potentially evasive and limited in their ability to address underlying issues effectively. Conversely, modifying how data is encoded presents a less coercive, more adoptable solution that stakeholders can choose to implement based on perceived value. This strategy promotes a voluntary adoption model, minimizing coercion and fostering an environment of cooperative innovation and respect for individual choice. The discourse surrounding these topics highlights a commitment within the community to evolve and adapt practices in a manner that respects the decentralized and participatory nature of Bitcoin development.