Crypto News

To Meme, Or Not To Meme: The CAT

Published

12 months ago

January 25, 2024

Is it really surprising, given that cats have essentially dominated the internet for the last two decades, that cat memes have finally taken over the Bitcoin space as well in the last few weeks? Cats are the most viral meme on the internet, so it’s not shocking in the least bit that the Taproot Wizards have leaned into it, reinforced by the trolling Luke over his “dietary choices.”

The question has to be asked though, are meme campaigns really how we want to go about deciding and discussing consensus changes to a protocol as valuable as Bitcoin? I’ve seen numerous music videos, campaigns to go out in the world and “educate” people on OP_CAT, and the whole “Quest” system that Taproot Wizards has launched taking place…but the reality is the vast majority of this content that I have seen has been incredibly superficial.

Rijndael, “Artificer” at Taproot Wizards and one of the few people, if not the only person, actually tinkering and playing with OP_CAT to build out use case examples, has made a demo of a OP_CAT based covenant script.

This script enforces a specific amount of Bitcoin be sent to a specific address, and by consensus there is no other way to spend these coins except with a transaction that meets those exact conditions. Look at the size of this script:

OP_TOALTSTACK OP_CAT OP_CAT OP_CAT OP_CAT de890a8209d796493ee7bac9a58b62fbced10ccb7311e24f26c461c079ead08c OP_SWAP OP_CAT OP_CAT OP_CAT OP_CAT OP_CAT OP_CAT OP_CAT OP_CAT OP_CAT 54617053696768617368 OP_SHA256 OP_DUP OP_ROT OP_CAT OP_CAT OP_SHA256 424950303334302f6368616c6c656e6765 OP_SHA256 OP_DUP OP_ROT 79be667ef9dcbbac55a06295ce870b07029bfcdb2dce28d959f2815b16f81798 OP_DUP OP_DUP OP_TOALTSTACK 2 OP_ROLL OP_CAT OP_CAT OP_CAT OP_CAT OP_SHA256 OP_FROMALTSTACK OP_SWAP OP_CAT OP_FROMALTSTACK OP_DUP 1 OP_CAT OP_ROT OP_EQUALVERIFY 2 OP_CAT 79be667ef9dcbbac55a06295ce870b07029bfcdb2dce28d959f2815b16f81798 OP_CHECKSIG

This is what it takes to emulate CHECKTEMPLATEVERIFY. The equivalent script using CTV would simply be:

CTV <32 byte hash>.

I ask, what is the value of something like OP_CAT in emulating the case of basic template covenants (things requiring a spending transaction to fulfill certain conditions defined ahead of time to be valid) like this? We know exactly how to handle schemes enforcing a template on transactions spending an output locked to a template covenant, and have multiple proposals for them. CTV, TXHASH, OP_TX, and even APO can emulate these schemes by stuffing a signature in the locking output of a transaction at the cost of an extra 64 bytes.

What actual use is OP_CAT in “experimenting” to meet the needs of a class of use cases that are mature enough in design that there are at least 4 covenant proposals that can handle those use cases with a tiny fraction of the data cost? “Oh, we want to experiment with CAT because it’s flexible!” You want to use 30 OP calls to do something that can be done in one? That is a reason to actually enact a consensus change to Bitcoin? The logic of that is beyond absurd.

Downplaying Risks

In a vacuum OP_CAT is sold as “simply concatenating two strings”, and many of the memes attempt framing it as “how can that be dangerous?” This is a wildly disingenuous narrative surrounding the proposal, and it completely ignores how it interacts with other existing and future aspects of script.

In particular CSFS + CAT opens a massive amount of possibilities in terms of what can be done with Bitcoin script, not all of it necessarily positive. CSFS allows you to verify a signature on an arbitrary piece of data in the course of executing a script, and CAT allows you to “glue” different pieces of data together on the stack. These two things create a massive design space for what it is possible to do with Bitcoin.

One concrete example would be the potential to enforce amounts, or relationships between different amounts, of specific inputs and outputs in a transaction. CAT allows you to build up a transaction hash from individual pieces on the stack, and CSFS allows you to verify a signature against a public key in the locking script against arbitrary pieces of that transaction as it is built up. This could ultimately enable the creation of open-ended UTXOs anyone can spend, as long as the spending transaction meets certain criteria, such as a specific amount of coins be sent to a specific address. Combine this with the reality of OP_RETURN based assets, and this starts getting into the territory of Decentralized Exchanges (DEX).

Some of the worst incentive distortion problems that have come to fruition on other blockchains ultimately stem from the creation of DEXes on those chains. Having direct non-interactive exchange functionality on the blockchain is one of the worst forms of MEV, especially when the potential exists for miners to lock-in their profit across multiple trades in the span of a single block, rather than having to actually carry the risk of a position across multiple blocks before closing it out and realizing profit.

Part of the movement behind Taproot Wizards is “bringing the innovation back.” I.e. that lessons learned in shitcoin land are coming home to Bitcoin, now while I firmly reject the notion that anything useful has been developed on other coins in the last decade other than the basic concept of zero knowledge proofs, this mantra getting louder ignores a massive component of that dynamic even if you disagree with my view there: there are lessons to be learned regarding what NOT to do as well as what TO do.

DEXes are one of the things NOT to do. Nothing has caused as much chaos, volatility in fee dynamics (which we need to smooth out over time for sustainability of second layers), and just all around incentive chaos regarding the base consensus layers of these protocols and their degree of centralization. The idea that we should rush to bring these types of problems to Bitcoin, or exacerbate them by introducing a way to trustlessly embed the bitcoin asset into them in more dynamic and flexible ways, is frankly insane. This to me speaks of large swaths of people who haven’t learned anything from watching what happened on other blockchains in the last half decade or so.

Forever Shackled By The Cat

Looking at the dynamic above between CSFS + CAT, it is worth pointing out that Reardencode’s recent LNHANCE proposal (CTV + CSFS + Internal Key) offers a path to give us eltoo for Lightning in a way that is actually more blockspace efficient than using APO. If this argumentation, and build out of proof of concepts, winds up winning over Lightning developers who want LN symmetry in order to simplify Lightning channel management and implementation maintenance, we very well could wind up getting CSFS in the process. If OP_CAT were active prior to this, then there is no way to avoid the types of detrimental side effects of the two proposals being combined.

This would hold true for every soft fork proposal going forward if OP_CAT were ever activated. It would be impossible to escape whatever side effects or use cases were enabled by combining OP_CAT with whatever new proposals come in future. On its own OP_CAT is clunky, inefficient, and rather pointless. But in combination with other OPs it begins to get stupidly flexible and powerful. This would be a dynamic we would never be able to escape, and features that might wind up being critically necessary in the future for Bitcoin’s scalability could inescapably come with massive downsides and risks simply because of the existence of OP_CAT.

Is this a reality we want to enter simply because of a meme campaign? Because people want to tinker with wildly inefficient means of doing things instead of looking through much more efficient and purpose built proposals? I would say no.

Meme campaigns can be fun, I know this. They foster a sense of community and involvement, it’s an inherent and inescapable part of the internet and the numerous cultures that exist on it. But this is not how we should be deciding the development process of Bitcoin. They can be fun, and they can even be viciously savage at stabbing directly to the heart of matters people dance around or equivocate on. But they are atrocious at capturing nuance and complexity in many regards.

Trying to steer the consensus of a network like Bitcoin purely based on the value of a meme, rather than reasoned consideration of proposals and their implications, is a disaster waiting to happen. The conservatism and caution of Bitcoin development is what has kept it at the forefront of this space as shitcoins have come and gone, imploding in the consequences of their fly by night carefree development attitude. As much as Bitcoin sorely needs to break out of its current rut of stagnation and lack of forward progress, devolving to uncritical memes and music videos is not how to do that. It risks destroying what made Bitcoin valuable in the first place, its solid and conservative foundation.

The OP_CAT meme campaign has undeniably taken on a lot of momentum, but is this really how we want to be deciding consensus changes for a protocol as valuable as Bitcoin?

Crypto News

You Should Not Wear This Bitcoin Shirt — Here’s Why

Published

2 hours ago

January 14, 2025

admin

Follow Nikolaus On &Xopf; Here For Daily Posts

Everyone has their own unique sense of style, but if you are wearing Bitcoin merch like the shirt in the X post below out in public — you should probably stop doing so.

This Bitcoin shirt is cringe as fuck.

Have fun getting 7 dollar wrench attacked. pic.twitter.com/zRlT2CFrIg

— Breadman (@BTCBreadMan) January 11, 2025

I agree with this post in that this shirt is cringe as fuck and will only bring unwanted attention.

Most people don’t understand Bitcoin and the lingo adjacent to it. If you’re wearing this out in public, the majority of people are not even going to understand it and will move on with their day, completely forgetting about it. So if you’re wearing the shirt, you’re not really flexing as hard as you think.

But some who will see you wearing it will know what it means, and this may lead to bad consequences.

Wearing a shirt that broadcasts to everyone that you own a full bitcoin (or basically $100,000, at the time of writing, in the form of a bearer asset) will likely just put a target on your back.

Don’t believe me?

This past November, the CEO of the Canadian company WonderFi was kidnapped and held for ransom. And more recently, a Pakistani crypto trader was kidnapped and forced to pay $340,000 to the kidnappers from his Binance account.

I’m not trying to scare anyone, but these things can happen, and you should at least avoid putting yourself in such a situation.

These criminals may or may not know how Bitcoin works, and it’s probably worse if they don’t. Because they might think you have it all on one exchange, or that you have your private keys located in one place that is easy to obtain, therefore thinking you are probably an easy target. And if you tell them you physically cannot give up your coins, and they don’t believe you, things could get ugly quick.

I’m not saying to never talk to anyone about Bitcoin ever or to be 100% secretive about it — I mean, I’m a public figure in this space and have thought through how to best limit the chances of something bad like this happening to me. The security of your bitcoin is important, but also is your personal security. Luckily for me, I am an American and have my second amendment rights. Protecting my Bitcoin from a potential $5 wrench attack is a lot easier with a firearm.

Upgraded my bitcoin security today by buying a Glock 19

— Nikolaus (@nikcantmine) December 26, 2020

If you are a proud owner of one full bitcoin, it’s fine to celebrate it, as that is a feat that most people on the planet will never be able to achieve.

My advice to you, though, is to celebrate it in a way that is more private, like with no one more than your family and very close friends that you trust. You can post online on X or Reddit anonymously about it if you really want to have a deeper conversation about it or to get the dopamine from all the other anons congratulating you on the accomplishment.

Don’t tell people how much bitcoin you own, and definitely don’t wear shirts that disclose it. Just stay humble and stack more bitcoin.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

You Should Not Wear This Bitcoin Shirt — Here's Why You are putting a target on your back by wearing merch like this.

Crypto News

Bitcoin DeFi Is Finding Product-market Fit With Runes

Published

3 hours ago

January 14, 2025

admin

Over the past year, the Bitcoin Renaissance has brought significant attention to BTCfi, or “Bitcoin DeFi” applications. Despite the hype, very few of these applications have delivered on their promises or managed to retain a meaningful number of “actual” users.

To put things into perspective, the leading lending platform for Bitcoin assets, Liquidium, allows users to borrow against their Runes, Ordinals, and BRC-20 assets. Where does the yield come from, you ask? Just like any other loan, borrowers pay an interest rate to lenders in exchange for their Bitcoin. Additionally, to ensure the security of the loans, they are always overcollateralized by the Bitcoin assets themselves.

How big is Bitcoin DeFi right now? It depends on your perspective.

In about 12 months, Liquidium has executed over 75,000 loans, representing more than $360 million in total loan volume, and paid over $6.3 million in native BTC interest to lenders.

For BTCfi to be considered “real,” I would argue that these numbers need to grow exponentially and become comparable to those on other chains such as Ethereum or Solana. (Although, I firmly believe that over time, comparisons will become irrelevant as all economic activity will ultimately settle on Bitcoin.)

That said, these achievements are impressive for a protocol that’s barely a year old, operating on a chain where even the slightest mention of DeFi often meets with extreme skepticism. For additional context, Liquidium is already outpacing altcoin competitors such as NFTfi, Arcade, and Sharky in volume.

Bitcoin is evolving in real time, without requiring changes to its base protocol — I’m here for it.

After a rocky start, Runes are now responsible for the majority of loans taken out on Liquidium, outpacing both Ordinals and BRC-20s. Runes is a significantly more efficient protocol that offers a lighter load on the Bitcoin blockchain and delivers a slightly improved user experience. The enhanced user experience provided by Runes not only simplifies the process for existing users, but also attracts a substantial number of new users that would be willing to interest on-chain in a more complex way. In contrast, BRC-20 struggled to acquire new users due to its complexity and less intuitive design. Having additional financial infrastructure like P2P loans is therefore marking a step forward in the usability and adoption of Runes, and potentially other Bitcoin backed assets down the line.

The volume of loans on Liquidium has consistently increased over the past year, with Runes now comprising the majority of activity on the platform.

Ok so Runes are now the dominant asset backing Bitcoin native loans, why should I care? Is this good for Bitcoin?

I would argue that, regardless of your personal opinion about Runes or the on-chain degen games happening right now, the fact that real people trust the Bitcoin blockchain to take out decentralized loans denominated in Bitcoin should make freedom lovers stand up and cheer.

We’re winning.

Bitcoiners have always asserted that no other blockchain can match Bitcoin’s security guarantees. Now, others are beginning to see this too, bringing new forms of economic activity on-chain. This is undeniably bullish.

Moreover, all transactions are natively secured on the Bitcoin blockchain—no wrapping, no bridging, just Bitcoin. We should encourage and support people who are building in this way.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin DeFi Is Finding Product-market Fit With Runes BTCfi is on track to compete with other ecosystems.

Crypto News

We’re Repeating The 2017 Bitcoin Bull Cycle

Published

4 hours ago

January 14, 2025

admin

The 2017 Bitcoin bull market was a wild ride, with prices soaring from under $200 to nearly $20,000. As we look at the current market, many are wondering if we might see a similar surge again. In this article, we’ll explore the data and trends that suggest we could be on the brink of another massive bull cycle.

Key Takeaways

The current Bitcoin cycle shows strong correlations with the 2017 cycle.
Historical data indicates potential for significant price increases.
Investor behavior patterns are mirroring those from previous cycles.

Understanding Bitcoin Bull Cycles

Bitcoin has had several bull cycles, each with its own unique characteristics. The most notable was in 2017, where the price skyrocketed. Now, as we analyze the current market, we see some interesting parallels.

The recent price action has been choppy, with Bitcoin hitting a new all-time high above $108,000 before retracing to below $90,000. However, it has since rebounded, and this fluctuation is not uncommon in bull markets.

Comparing Current Cycle to Previous Cycles

When we compare the current cycle to previous ones, particularly the 2017 cycle, we notice some striking similarities. The following points highlight these correlations:

Cycle Length: The 2017 cycle peaked at 168 days from its low, while the 2021 cycle peaked at 160 days. Currently, we are 779 days into this cycle, suggesting we have a significant amount of time left.
Price Action Correlation: The correlation between the current cycle and the 2017 cycle is at an impressive 0.92. This means that the price movements are closely aligned, indicating that we might be following a similar trajectory.
Investor Behavior: The MVRV (Market Value to Realized Value) ratio shows a strong correlation of 0.83 with the 2017 cycle, suggesting that investor behavior is also mirroring past trends.

The Role of Halving Events

Bitcoin halving events have historically been significant markers in the price cycle. The last halving occurred in 2024, and as we look at the current cycle, we see that it closely follows the pattern established in 2017. The halving events in both cycles occurred within a similar timeframe, which could indicate that we are on a similar path.

Future Predictions

Looking ahead, if the current cycle continues to follow the 2017 pattern, we could see a significant price increase throughout 2025. While some predictions suggest prices could reach as high as $1.5 million, it’s essential to approach such forecasts with caution. A more realistic peak might align with historical trends, potentially occurring in late 2025.

Conclusion

In summary, the current Bitcoin bull market shows strong correlations with the 2017 cycle, both in terms of price action and investor behavior. While we may not see the same explosive growth as in 2017, the data suggests that we could be in for an exciting ride in the coming months. As always, it’s crucial to stay informed and make decisions based on thorough analysis.

If you’re interested in more in-depth analysis and real-time data, consider checking out Bitcoin Magazine Pro for valuable insights into the Bitcoin market.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

We're Repeating The 2017 Bitcoin Bull Cycle Explore the potential for Bitcoin to repeat the 2017 bull cycle. We analyze price action, investor behavior, and future predictions for Bitcoin’s market trajectory.