As someone who has been deeply involved in the crypto world since its inception, I can confidently say that the introduction of OP_CAT is a game-changer for Bitcoin. Having witnessed the evolution of this space firsthand, I’ve seen the potential that lies within Bitcoin, but also the limitations it faces due to its current structure.
buried within the core of the original Bitcoin system is an unused sequence of code, dormant for a long time. This obscure piece might awaken to offer a variety of additional features, which could possibly position Bitcoin’s network on par with Ethereum when it comes to Decentralized Finance (DeFi) activities.
The name of the upgrade is “OP_CAT” (which stands for operation code concatenate), a small set of codes that Satoshi Nakamoto first introduced. These codes were integral to Bitcoin’s early scripting system, enhancing the functionality of transactions and broadening the range of actions users could execute using Bitcoin.
As a concerned Bitcoin investor, I initially pondered over the potential risks associated with OP_CAT. I worried it might invite security threats such as denial-of-service (DoS) attacks, or even create exponential memory demands that could potentially push our network to its breaking point.
Consequently, Nakamoto took out OP_CAT from the list of operational codes that were actively used in 2010, which was part of a larger plan aimed at streamlining and strengthening Bitcoin.
In October 2023, cryptographer Ethan Heilman and Botanix Labs’ lead engineer Armin Sabouri revitalized the concept of OP_CAT. They presented a plan to reinstate this opcode on the Bitcoin network using a soft fork.
Should it be accepted, this update is expected to trigger a series of additional updates within the network, potentially incorporating rollup technology and enhancing Bitcoin’s Tapscript capabilities and smart contract-like functionalities.
After that, the use of OP_CAT has grown swiftly, not only within Bitcoin communities but also among a broader group of developers.
As a researcher on April 25th, I proudly announced that Bitcoin Improvement Proposal (BIP) number 327 had been officially bestowed upon me. This milestone signified the initial stride in the journey towards implementing and endorsing the proposed software update.
Among those championing the OP_CAT upgrade is a notable group, including Taproot Wizard co-founders Udi Wertheimer and Eric Wall. Notably, Eli Ben-Sasson, CEO of StarkWare, is one of the prominent figures from the Ethereum community actively advocating for the implementation of OP_CAT.
A “simple” addition with a big upside
In conversation with CryptoMoon, Ben-Sasson expressed his aim to enhance the Bitcoin network’s capacity, enabling it to process numerous transactions (thousands) per second. Additionally, he aspires for Starknet to become the pioneering platform that concurrently settles transactions on both Bitcoin and Ethereum networks.
According to Ben-Sasson, the endorsement of OP_CAT – a feature that facilitates rollups, contracts, fraud detection mechanisms, and STARK scaling – is crucial in realizing true scalability for Bitcoin.
To put it simply, including OP_CAT doesn’t allow for the creation of true smart contracts directly on Bitcoin. Instead, while Bitcoin can’t replicate complex systems like Uniswap, you can effortlessly use a platform similar to Uniswap v4 called Ekubo, which operates on a layer-2 network above Bitcoin.
“But even with this, you could technically have all of DeFi and more: gaming, SocialFi and DePIN.”
However, some individuals express doubts about the essentiality of OP_CAT for Bitcoin’s future expansion, arguing that the existing sidechain framework is adequate enough to facilitate scalability for Bitcoin.
Bart van der Voort, as the chief strategy officer for the Bitcoin liquid staking protocol called pSTAKE, stated that the potential use of OP_CAT might not be essential due to the significant scaling achievements of Bitcoin sidechains so far, which could make the addition of an unnecessary risk.
“It’s introducing a risk — to a degree — for Bitcoin. Why mess with something that’s working?”
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“It seems to me that the numerous side chains developing alongside Bitcoin might make additional ones unnecessary, as there appears to be sufficient diversity already.
Bitcoin sidechains can be explained as independent blockchain systems such as CORE, Stacks, BitLayer, and bSquared, which operate alongside the main Bitcoin network. These sidechains interact with the Ethereum Virtual Machine (EVM) and utilize a bridge for transferring assets between them and the primary network. In simpler terms, they are secondary networks that function in sync with Bitcoin but can also connect to the Ethereum ecosystem.
Core, similar to other Bitcoin sidechains, offers Bitcoin holders the opportunity to transfer their dormant Bitcoins (BTC) into Core’s DAO protocol, thereby earning interest on their Bitcoins which would have otherwise remained idle in a cold storage.
Professor Ben-Sasson took notice of the potential dangers connected with the introduction of OP_CAT, and in response, he established a $1-million research grant program for developers as part of a comprehensive initiative to evaluate the benefits and drawbacks of OP_CAT. This initiative aims to guarantee that the implementation of OP_CAT can be carried out securely and safely.
Sidechains aren’t enough to move the needle
According to Labrys founder Lachlan Feeney, sidechains aren’t compelling enough, particularly in terms of innovation and security, to entice early adopters of Bitcoin.
Currently, there’s no genuine Level 2 (L2) system for Bitcoin except the Lightning Network; it does have some functionalities but not extensive ones.
Feeney pointed out that most of the current group of Bitcoin Layer 2 solutions primarily function as Ethereum Virtual Machine (EVM)-settling Layer 2 solutions, which can be thought of as sophisticated bridges between networks, often inaccurately referred to as Bitcoin layer-2 networks.
Many of these projects are based on Ethereum and offer compatibility with Bitcoin, but despite their technical association with Bitcoin, they fail to meet the criteria that would qualify them as authentic Layer 2 solutions for Bitcoin.
The issue at hand, as Feeney pointed out, is that existing Bitcoin sidechains do not naturally settle transactions on the main network. This means they can’t create a self-reinforcing cycle of activity that would be essential for Bitcoin to compete with Ethereum in any substantial way.
“The current proposed sidechains are merely temporary, quick fixes. For Bitcoin DeFi to surpass Ethereum DeFi in size, we need large Bitcoin investors (or ‘whales’) to shift their assets and utilize the protocols.
“And to do that, you need to move towards having a legitimately trustless environment, and OP_CAT is absolutely going to have a very large role to play in doing this.”
According to Feeney, the roadmap for Bitcoin Decentralized Finance (DeFi) and other prospective applications on this network post-OP_CAT isn’t likely to involve immediate widespread acceptance. Instead, he suggests that it could take some time before the traditionally cautious Bitcoin enthusiasts embrace these new developments.
From my perspective as an analyst, I find it unlikely that the Ethereum DeFi community would abruptly switch their allegiance to Bitcoin layer-2 solutions and Bitcoin DeFi platforms. The current ecosystem they’ve built on Ethereum is deeply ingrained, and the network effects, familiarity, and established relationships are significant factors that make a sudden shift seem improbable. However, it’s essential to remain vigilant and adaptive as new technologies emerge, and I will continue to monitor any potential shifts in the space.
A significant number of Bitcoin enthusiasts will view many of these protocols and coins as fraudulent or inferior (scams/shitcoins), preferring to stay away from them, particularly when they’re connected to other networks via sidechains.
To Feeney, OP_CAT addresses this issue effectively by providing genuine practicality and security for Bitcoin at its fundamental layer.
OP_CAT isn’t just an upgrade; it’s a liferaft
However, Feeney not only views OP_CAT as an appealing enhancement for Bitcoin that might foster DeFi and additional functionalities, but also considers it an essential component for the network’s longevity in the future.
One issue that’s often discussed by supporters and critics alike about the Bitcoin system is the worry that, given its present economic structure, it may eventually struggle to maintain itself in the long run.
Currently, Bitcoin’s operation primarily relies on miners’ income from transaction fees and mining rewards. Unless Bitcoin’s price miraculously doubles every four years consistently, which is highly improbable, the mining rewards won’t be sufficient to maintain and motivate the network’s security indefinitely.
According to Feeney, for Bitcoin to endure in the long run, it must develop a flourishing layer-2 (L2) infrastructure.
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In essence, the majority (around 90%) of Bitcoin miners’ income currently stems from block rewards. As these rewards diminish and eventually disappear, the only source of miner revenue becomes transaction fees. Consequently, Bitcoin will need to survive solely on these fees or risk ceasing to exist.
Many believe we’re a century off, but in reality, it might be just one or two more halvings until the block reward becomes too small to maintain the network’s security. At that point, transaction fees would need to significantly increase.
“Its options are: It fails to create an L2 ecosystem and it dies, or it has this thriving L2 ecosystem where the L1 becomes a settlement chain and thrives.”
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2024-11-11 15:40