A single, long-dormant string of code hidden deep in Bitcoin’s original stack could introduce a suite of modern functionalities that could potentially make Bitcoin’s network rival Ethereum in terms of its decentralized finance (DeFi) business.

The update is called “OP_CAT” (brief for operation code concatenation) and refers to a few straightforward lines of code originally introduced by Satoshi Nakamoto. This code was part of Bitcoin’s initial scripting system and effectively increased Bitcoin’s transaction utility and expanded the variety of operations that users could perform with Bitcoin.

However, Nakamoto was initially worried about this OP_CAT could expose the Bitcoin network to security threats, including denial-of-service (DoS) attacks and exponential memory demands that could potentially overload the network.

As a result, Nakamoto removed OP_CAT from busy opcodes in 2010 as part of a broader effort to make Bitcoin simpler and more resilient.

However, in October 2023, cryptographer Ethan Heilman and Botanix Labs Chief Engineer Armin Sabouri breathed fresh life into the OP_CAT idea with a proposal to reintroduce the operational code via a tender fork to the Bitcoin network.

If approved, the update will bring a number of modern improvements to the network, introducing the ability for rollups and expanding Bitcoin Tapsprict and its astute contract-like functionalities.

Since then, OP_CAT has quickly gained popularity not only in Bitcoin circles, but also in the broader developer community.

On April 25, OP_CAT was given Bitcoin Improvement Proposal #327, marking the first real step towards introducing and accepting software updates.

While the OP_CAT update certainly has no shortage of supporters — most notably Taproot Wizard co-founders Udi Wertheimer and Eric Wall — StarkWare CEO Eli Ben-Sasson is one of the key industry figures on Ethereum’s side pushing for the introduction of OP_CAT.

A “simple” addition with a large advantage

In an interview with Cointelegraph, Ben-Sasson said his goal is to aid scale the Bitcoin network so that it can handle thousands of transactions per second and make Starknet the first network to be simultaneously based on Bitcoin and Ethereum.

OP_CAT approval – which will enable rollups, covenants, fraud protection and STARK scaling — is key to achieving true bitcoin scalability, Ben-Sasson said.

“By simply adding OP_CAT, you cannot introduce actual astute contracts on Bitcoin itself. Bitcoin won’t be able to do something like Uniswap, but you can easily have Ekubo, which is like a version of Uniswap v4 on Starknet, running on L2 [layer-2 network] on Bitcoin,” he added.

“But even with that, you can technically have everything DeFi and more: gaming, SocialFi and DePIN.”

However, not everyone is convinced of the necessity of OP_CAT for Bitcoin’s growth in the long run, arguing that the current sidechain structure is already sufficient to scale Bitcoin.

Bart van der Voort, pSTAKE protocol strategy director, said OP_CAT may pose unnecessary risks given the relative success of Bitcoin sidechains in scaling Bitcoin so far.

“This introduces risk – to some extent – ​​for Bitcoin. Why break something that works?”

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“I really don’t know if it’s that necessary because you can already see all the side chains that are emerging and building around Bitcoin itself. This should be enough.

Bitcoin sidechains refer to networks like CORE, Stacks, BitLayer, and bSquared, which are separate blockchain networks that run parallel to the Bitcoin network but connect to the Ethereum Virtual Machine (EVM) and use a bridge to transfer resources between them and the network parent.

CORE – like other Bitcoin sidechains – allows Bitcoiners to connect their idle Bitcoin (BTC) to the CORE DAO protocol and gain a profit on BTC that would otherwise remain passively in a cold wallet.

Ben-Sasson heard about the risks of introducing OP_CAT and launched a $1 million research grant fund for developers as part of a broader effort to assess the pros and cons of OP_CAT and ensure it can be safely implemented.

Side chains are not enough to move the needle

Labrys founder Lachlan Feeney is on the other side of the argument, saying that sidechains simply don’t offer enough innovation or security to make them attractive to OG Bitcoiners.

“There are no real L2s on Bitcoin right now – apart from the Lightning Network, which doesn’t do much.”

Feeney said that most of the current Bitcoin L2 cohort is essentially nothing more than L2 clearing EVMs and glorified bridges that are often mislabeled as Bitcoin Layer 2 networks.

“Many of these projects are even based on Ethereum and have a bridge to Bitcoin, and while they are technically aligned with Bitcoin, they are not really what anyone would call true L2 Bitcoin.”

That’s the problem, Feeney said. Because the current range of Bitcoin sidechains are not natively embedded in the network, they do not essentially allow for the positive feedback loop of activity that would be necessary for Bitcoin to one day compete with Ethereum in any meaningful sense.

“All side chains currently being proposed are simply quick, short-term solutions. The only way Bitcoin DeFi has grown bigger than Ethereum DeFi is when huge Bitcoin whales move their capital and plug it into the protocols.

“To do that, you need to move towards a truly trustless environment, and OP_CAT will certainly have a very big role to play in that.”

Feeney said the way forward for Bitcoin DeFi and other potential applications built on the network after the introduction of OP_CAT won’t necessarily rely on sudden mass adoption, saying it may take some time for Bitcoin’s famously cautious maximalists to come to grips with this program.

“I don’t think the Ethereum DeFi crowd is going to leave Ethereum and suddenly start using Bitcoin L2, Bitcoin DeFi and whatever else.”

“You also have a huge portion of the Bitcoin crowd that will view many of these protocols and applications as scams and shitcoins and want no part of it, especially when these are sidechains that settle on other networks.”

According to Feeney, OP_CAT solves this problem by offering true entry-level Bitcoin utility and security.

OP_CAT is not just an update; it’s a life raft

But Feeney doesn’t just think OP_CAT is a cool upgrade to Bitcoin that could enable DeFi and other opportunities; he said this is actually a key part of the network’s long-term survival.

A common fear among both critics and supporters of the Bitcoin network is that it will eventually reach a point where it can no longer sustain itself within the current economic model.

Right now, Bitcoin is almost entirely dependent on mining revenues and fees, and – outside of an idealistic and unlikely scenario where the price of BTC doubles perfectly every four years – block rewards will not be able to sustain and incentivize the security of the network forever.

“Bitcoin cannot survive long term as it does today. It needs to have a thriving L2 ecosystem,” Feeney said.

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“If you take it to the extreme, about 90 percent of miners’ revenue today comes from block rewards. Eventually the block rewards will dry up and there will be no block rewards left. Therefore, miners’ income must come from transaction fees. “Eventually you will get to a point where Bitcoin has to sustain itself based on transaction fees or it will die.”

“Many people think it’s 100 years away, but in reality it’s just one or two times over the halfway point, where the block reward is so miniature that it’s not enough to keep the network secure, and therefore transaction fees have to significantly escalate, he added.

“It has the following options: it does not form an L2 ecosystem and dies, or it has a thriving L2 ecosystem where L1 becomes a settlement chain and thrives.”