Bitcoin’s New ‘Cat’ Proposal: Freeze or Flee?

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Quantum computing remains a concern for Bitcoin and crypto markets, posing a security threat to its underlying cryptography. However, a new threat emerges as a controversial “Cat” Bitcoin Improvement Proposal, sparking heated debate among developers about labeling millions of inscription-related outputs as permanently unspendable. 🐱💸

The draft BIP seeks to address concerns about blockchain bloat, raising key questions around property rights and core Bitcoin principles. Community responses range from strong support to warnings about setting a risky precedent. 🧠

Bitcoin Developers Debate BIP “The Cat”: Proposal to Combat UTXO Spam from Ordinals and Stamps 🐾

Every Bitcoin transaction spends coins that came from previous transactions. The outputs of a transaction represent amounts of Bitcoin assigned to addresses. If an output hasn’t been spent yet, it becomes an Unspent Transaction Output (UTXO). 🧾

Essentially, a UTXO is a chunk of Bitcoin you can spend in the future. Or, as one developer put it, “a digital heirloom for the forgetful.” 🧠

The plan addresses the recent doubling of Bitcoin’s UTXO, set to over 160 million entries in 2023, much of which stems from Ordinals and Bitcoin Stamps. 🧾

In recent years, Bitcoin’s Unspent Transaction Output set has grown significantly, posing challenges for node operators and miners. According to the draft discussion, UTXOs rose from about 80-90 million to more than 160 million during 2023. 🧮

Now, nearly half contain fewer than 1,000 satoshis, with most serving as a form of storage rather than for monetary transactions. 🧾

This increase is primarily due to Ordinals inscriptions, which place data in Taproot witness fields, and Bitcoin Stamps, which create unspendable outputs through fake bare multisig addresses. 🧾

These methods circumvent rules like OP_RETURN, originally created to discourage blockchain bloat by limiting non-monetary data. OP_RETURN’s 80-byte relay policy reduced bloat, but recent techniques exploit new transaction formats to store arbitrary data. 🧾

The impact is significant. Each node must load the entire UTXO set to validate transactions, driving up costs for miners and for anyone running multiple nodes. 💸

Bitcoin developer Mark Erhardt described Stamps’ use of the UTXO set as “probably, from a technical perspective, one of the more egregious uses of blockchain.” 🐾

Historically, Bitcoin has prioritized monetary transactions and limited data usage. Bitcoin Core developer Greg Maxwell said of OP_RETURN limits, “Part of the idea here is shaping behavior towards conservative needs.” 🧠

However, both Ordinals and Stamps bypass these rules, which fuels arguments for stronger measures, such as “The Cat.” 🐱

Inside “The Cat” BIP Proposal 🐾

The proposal introduces Non-Monetary UTXOs (NMUs), flagged by indexers with an NMU bit. Inscription-related outputs identified in this way would become non-spendable, making them unavailable as transaction inputs. 🧾

Nodes would prune these outputs, reducing storage needs and costs. A most efficient way to make your coins vanish-literally. 🧾

“New BIP proposal “The Cat” aims to radically combat spam from Ordinals and Stamps on Bitcoin: by freezing satoshis through consensus. The idea is to permanently make millions of small UTXOs used to store data non-spendable, removing those sats from circulation at the cost of creating an unprecedented precedent for the demonetization of satoshis,” wrote Livecoins, a popular account on X. 🧾

Classification depends on value thresholds, focusing on UTXOs under 1,000 satoshis during certain windows. When the feature activates, nodes would ignore these NMUs during transaction validation. 🧾

Advocates argue this deters spam economically, as it avoids ongoing technical filtering. Supporters, such as TwoLargePizzas, believe benefits extend well beyond one-time cleanup. 🧾

By making it clear that Bitcoin rejects non-monetary bloat, “The Cat” could deter future spam. Nona YoBidnes points out that spam makes up 30-50 percent of all UTXOs, calling the proposal “a powerful anti-spam message” for the network. 🧾

The BIP targets millions of dust outputs left unspent, each using valuable resources. For large-scale services, this cumulative burden means real infrastructure costs and slower node sync times for newcomers. 🧾

Debate: Property Rights and Bitcoin’s Core Values 🧠

Opponents present strong arguments, calling the proposal a drastic change to Bitcoin’s core properties. Greg Maxwell, a leading developer and privacy advocate, sees modest storage savings as little justification for “disabling UTXOs” and calls it “asset seizure,” undermining Bitcoin’s values. 🧾

Developer Ataraxia 009 warns the change “represents a dangerous slippery slope.” By freezing certain UTXOs at the consensus layer, the door could open for future coin confiscation. 🧾

This issue resonates with a community focused on resistance to censorship and asset seizure. 🧾

The discussion centers on whether Bitcoin should discriminate between transaction types at the protocol level. 🧾

Supporters see inscription spam as an attack to be stopped, while critics warn that this could empower the protocol to judge the legitimacy of any transaction. 🧾

If the network is willing to remove satoshis based on their use, some fear broader interventions may follow. 🧾

The debate also explores Bitcoin’s identity. Is Bitcoin just a monetary system, or does its censorship resistance extend to all valid transactions? 🧾

Supporters cite the tradition of limiting data storage, but opponents note that Ordinals and Stamps are still valid under current rules. 🧾

Community feedback is ongoing during the draft’s review, before any official BIP submission. The result will influence technical decisions as well as how Bitcoin balances core values and operational needs. 🧾

Regardless of “The Cat” outcome, the discussion highlights tensions between efficiency and principle as Bitcoin continues to scale and face new challenges. 🧾

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2025-12-26 11:02