Bitcoin Audible — Episode Chat_154

"Unpacking 'The Cat' with the Shitcoin Insider"

Host: Guy Swann
Guest: Shitcoin Insider
Date: December 19, 2025

Episode Overview

This episode dives deep into a new and highly controversial proposal for Bitcoin called "The Cat," brought forward by a pseudonymous author, Clear Ostrom. The Cat targets the growing problem of UTXO bloat resulting from inscriptions, NFTs, and various forms of on-chain “spam” via Ordinals and Stamps. Rather than blocking or censoring certain transaction types at the protocol level, The Cat aims to disrupt the market ecology for these non-monetary uses by making their trading difficult, undermining trust and financial incentives. Guy Swann and the Shitcoin Insider break down the technical, economic, and political ramifications of this approach, all the while reflecting on the broader challenges of protocol governance and community discourse around potentially “confiscatory” soft forks.

Key Discussion Points and Insights

1. What Is "The Cat"? – [08:22]

• Definition and Intent:
  • The Cat is a Bitcoin soft fork proposal by Clear Ostrom aiming to address UTXO set bloat from NFTs, ordinals, and stamp protocols.
  • Unlike previous attempts to police transaction types (e.g., banning opcodes or limiting OP_RETURN data), The Cat focuses on classifying and prunably 'freezing' UTXOs used as data pointers, specifically those tracked for NFT-like applications.
• Mechanics:
  • Identification: Uses ordinals’ own deterministic tracking methods to classify UTXOs as “non-monetary” (used as NFT pointers).
  • Consequence: Such UTXOs (below a certain value, e.g. 1,000 sats, though possibly down to the “dust limit” of 546 sats) would become unspendable after activation — effectively freezing the associated tokens/NFTs and rendering markets/trading unviable.
• Not Prevention, but Disruption:
  • The Cat doesn’t block inscription, but destroys market confidence: “If you can’t sell it, what’s the incentive to spam?” ([04:00])
  • Quote (A/Shitcoin Insider, 08:14):
    “We can’t stop you from making these things, and we’re not going to try. Instead, we’re going to disrupt your markets, disrupt the trust in your markets, and remove all financial incentive to do this in the first place.”

2. Technical Rationale and UTXO Bloat — [17:16]

• Scope of NFT Data:
  • According to analysis, as much as one third or more of the entire UTXO set is now comprised of outputs tracking NFTs or data stamps (over 51 million UTXOs, close to 40% of UTXO set size by data on some nodes).
• Protection for Innocents:
  • Outputs above a satoshi threshold (proposed 1,000 sats or potentially the dust limit) would not be affected, reducing risk of “innocent” users’ bitcoin being frozen.
  • If someone unknowingly receives one of these UTXOs, they can consolidate or spend it in advance to avoid being impacted.

3. Economic Incentives and Game Theory — [38:06]

• On-Chain Non-Fungibility:
  • While bitcoin wants satoshi fungibility, NFT systems depend on non-fungibility ("ordinal theory" tracks specific sats as assets)
  • The Cat uses this very assumption: “You’re using sats as a database pointer, not as money, so the network will treat it as such if you abuse it at scale.”
  • Quote (B/Guy, 28:26):
    “Sats are fungible. The network needs to be dumb... [But] the market itself is trying to make them non-fungible.”

4. The Community Debate & Censorship Outcry — [49:43]

• Proposal Submission Drama:
  • The Cat was initially censored from the Bitcoin-dev mailing list, later resubmitted amidst controversy and debate over process and censorship.
  • Quote (B/Guy, 49:43):
    "Attempting to silence it is ridiculous... attempting to kill discussion over a proposal, regardless of how controversial, does more harm to trust and openness in the process than simply debating the merits."
• Precedent of “Confiscation”:
  • Some previous BIPs (such as quantum vulnerability cleanups) have been “confiscatory”; removing/burning coins under certain rules is not unprecedented in discussion.
  • Many see outright censorship of discussion as antithetical to Bitcoin’s open ethos.

5. Philosophical Questions: Exploit vs. Censorship — [32:53]

• Bug or Feature?
  • The line between creative use of Bitcoin’s scripting/data capabilities and protocol “exploits” is blurred.
  • “If we agree a use is abusive and antithetical to monetary purpose, is it legitimate to use social consensus to suppress it?”
  • Quote (B/Guy, 34:05): “You have to figure out how to argue that that’s not an exploit of the transaction format... The suggestion that it’s censorship immediately begs the question — the only way that’s true is if NFTs are valid transactions according to Bitcoin’s intention.”

6. Resistance to “Soft Forks” and Fungibility Concerns — [28:01], [62:12]

• Both hosts express discomfort with a confiscatory soft fork, as it undermines the principle that all bitcoin is equal and the network remains blind to transaction purpose.
• The need for consensus: only if a true threat to node operation or scalability is demonstrated would such heavy-handed interventions be justified.
• Quote (B/Guy, 32:53): “I would never support anything that discriminates against a ‘good sat’ and a ‘bad sat.’”

7. Policy Alternatives: Soft Incentives & State Compression — [75:01]

• Discusses less invasive, non-consensus-breaking ideas like:
  • Archiving “dust” or non-monetary UTXOs with the burden on the spender to recover them
  • Mempool policy tweaks to deprioritize these transactions
  • Using state compression (e.g., UTXO snapshots) for likely-unspendable outputs

Notable Quotes & Memorable Moments

• On the Cat’s Market-Focused Disruption:
  “You can do it all you want, but good luck trying to sell it... if you mess up their markets and it’s unattractive to buy and trade NFTs, you won’t have those problems at scale.” — Shitcoin Insider [08:14]
• Reversal on Shitcoins:
  “The biggest thing I’ve learned from 2020 to 2025 in shitcoins is how much I wish the Bitcoin shitcoiners would go and use those shitcoins... take these people from us!” — Shitcoin Insider [06:38]
• Fungibility & Principle:
  “Sats are fungible. The network needs to be dumb, right ... Doesn’t need to say these are good sats and these are bad sats.” — Guy Swann [28:26]
• On Community Division:
  “Everybody's just so butt-hurt about this stuff... Why is everybody, what the fuck are you so afraid of that you can't have a conversation about these ideas?” — Guy Swann [47:51]
• Censorship of Discussion Is Damaging:
  “It actually does them a huge disservice and poisons the trust in both the openness and the objectivity... There’s a big difference between removing useless comments and preventing the discussion entirely.” — Guy Swann [55:10]
• On Developer Gatekeeping:
  “The most dangerous thing from an authoritative perspective is to dismiss somebody who you think isn’t good enough... because you’re going to have your foot stuck in your mouth at some point.” — Guy Swann [89:07]
• Engineering vs. Practical Wisdom:
  [Long riff about real-world mechanics solving problems theoretical experts dismiss, e.g., “I had a country mechanic fix a transmission with JB Weld when all the big shops said it couldn’t be done.”] — Shitcoin Insider [100:16]

Key Timestamps

| Timestamp | Segment/Topic | |-----------|-----------------------------------------------| | 00:00 | Origins and context of the Cat proposal | | 08:22 | Deep dive: What is “The Cat” and how it works | | 17:16 | Scope: NFT and spam UTXOs in today's network | | 28:01 | Fungibility, soft forks, and “dumb” network | | 32:53 | Bugs, exploits, and philosophy of censorship | | 38:06 | Economic incentives and non-fungibility | | 49:43 | Censorship controversy and proposal process | | 61:44 | Are we having the right discussion? | | 62:12 | Is UTXO bloat actually a problem? (Greg Maxwell's claim) | | 75:01 | Alternatives: Policy, state compression | | 80:11 | Mailing list, dev incentives, and politics |

Tone & Takeaways

• The conversation is lively, irreverent, and unsparing in its critique of both technical and social aspects of Bitcoin governance.
• Both host and guest acknowledge The Cat is unlikely to be adopted soon but credit it for provoking essential discussion about the nature of spam, economic incentives, and the boundaries of protocol change.
• Strong skepticism toward developer centralization and gatekeeping; advocacy for open, even controversial, discussion and debate.
• Ultimately, The Cat raises fundamental questions about what Bitcoin should defend (monetary use), whether protocol-level discrimination is ever justified, and how to maintain both technical and social integrity of an open-source monetary system.

For Further Reference

• Clear Ostrom’s Cat Proposal:
  GitHub Repo
  Twitter: @ostrom72158
• Mailing List Discussion:
  Bitcoin-dev mailing list archive
• Ordinal Theory: See ordinals.com for protocol documentation.
• UTXO Archival Proposals:
  See proposals by Robin Linus and Utreexo for context on state compression.
• Relevant BIPs:
  • BIP 444, BIP 2106, Taproot cleanup proposals

If you care about the future of Bitcoin’s technical standards, this episode is a passionate, opinionated tour through the technical, ethical, and political minefield surrounding ‘The Cat’. It’s an accessible way to grasp the evolving debate about Bitcoin’s “social contract,” from first principles up to today’s pragmatic headaches.