bitSmiley (SMILE) is a BTCFi platform that offers multichain stablecoin minting and lending functions, backed by BTC collateral.

The Bitcoin (BTC) blockchain started as a network devoid of smart contract functionality, but has managed to develop some form of 

 (DApp) ecosystem over the past few years — thanks to 

 (STX), Merlin Chain and Rootstock (RSK). Native Bitcoin protocols and new token standards — 

 upgrade have also contributed to the development of (modest) smart contract–like functions on the chain. Thanks to these innovations, an entirely new field, 

Unfortunately, the BTCFi niche remains underdeveloped compared to the thriving DeFi ecosystem of 

 chains. One key reason for this deficit is the lack of sophisticated DeFi functionality within the Bitcoin ecosystem, with few protocols capable of offering full-fledged lending, borrowing and yield management services. 

Another problem is the limited liquidity due to traders' inertia — having invested their time and funds in Ethereum and other smart blockchains, many DeFi users are unwilling to explore Bitcoin-based opportunities.

bitSmiley (SMILE) is a BTCFi project that aims to expand BTC-backed stablecoin and lending functions to various platforms beyond Bitcoin. Users of the platform can take advantage of BTC-collateralized stablecoin minting and lending services, with the issued assets usable on a wide variety of DeFi apps across many chains, including Ethereum. By offering these services, bitSmiley hopes to expand the usability of BTC funds well beyond Bitcoin's still immature DeFi environment.

 (SMILE) is a DeFi platform specializing in multichain 

 minting and lending services backed by Bitcoin. 

Its users can provide BTC funds as collateral to mint the bitUSD stablecoin, an asset soft-pegged to the U.S. dollar. bitUSD can be further used across a variety of DeFi protocols (on Ethereum and other smart contract chains) to earn yields, similar to the way that native Ethereum stablecoins are leveraged within DeFi. The protocol also offers cross-chain lending services, whereby users can lend funds in bitUSD and other stablecoin assets, based on the bitRC-20 standard, in exchange for collateral in BTC.

The bitRC-20 standard was developed by the bitSmiley project team to enable the issuance of native Bitcoin stablecoins, which can be further utilized within other platforms' DeFi ecosystems. bitRC-20 leverages Bitcoin's 

 technology to power the issuance and management of stablecoins.

Additionally, the bitSmiley protocol has added the function to mint and lend bitUSD — and possibly other bitRC-20 stablecoins in the future — using a variety of Bitcoin-based 

 tokens (LstBTCs). This lets users earn yields from staking platforms while using the underlying funds to mint and lend bitUSD.

In addition to stablecoin minting and lending services, bitSmiley has also developed a crypto derivatives trading protocol, although this service still appears to be in development as of early November 2024.

bitSmiley launched its operations in May 2024 on two popular 

. Then, in September, the project announced a key partnership with the 

 (ZETA) omnichain protocol, which may help optimize the cross-chain accessibility of assets originally issued on bitSmiley. ZetaChain’s protocol maintains smart contracts for cross-chain communications on multiple blockchain platforms within the Bitcoin, Ethereum and 

The bitSmiley project was founded in 2023, and is backed by two main venture capital investors — OKX Ventures and ABCDE — as well as a number of other prominent investors and backers, including KuCoin Ventures, MH Ventures, Skyland Ventures, Cypher Capital and CMS Holdings.

How Does bitSmiley Unlock Native Bitcoin Liquidity?

While users can keep their bitUSD funds working for them within the BTCFi ecosystem, there's one key problem: the native BTC DeFi world lacks the levels of liquidity, trading activity and product sophistication that Ethereum and other smart contract blockchains can offer. This makes the use of bitUSD beyond the Bitcoin ecosystem particularly relevant for traders.

Thanks to bitSmiley's cross-chain capabilities, bitUSD can be transferred to Ethereum and other major smart contract chain ecosystems to be used in DeFi protocols in those environments. This dramatically expands product alternatives, as well as the number of protocols on which bitUSD may be utilized.

bitSmiley uses Bitcoin's native inscription technology, multisig wallets and a group of listener components to enable the transfer of bitUSD to other blockchains. bitUSD is natively issued on Bitcoin as an inscription, and sent to a multisig wallet. A group of listeners configured by the platform detects the transfer to the wallet, checks the transaction and sends the information to the General Message Bridge, which is then responsible for minting bitUSD on the respective external chains.

bitSmiley's flagship service is bitUSD stablecoin minting. Users can mint the asset, which is native to Bitcoin and uses the bitRC-20 standard developed by the project, by providing collateral in BTC into the bitSmiley Treasury. bitSmiley implements overcollateralization to ensure the platform's financial security and stability. If the value of the collateral falls below a certain threshold, it becomes a target for a 

 process. The liquidated party also incurs a charge as a liquidation penalty.

The liquidated collateral is put up for an auction. bitSmiley uses the Dutch auction model, whereby the price starts at a higher level and then gradually decreases until a willing party decides to buy the collateral funds.

The money earned by the auction is stored in a surplus account, of which 10% goes to operational expenses and 90% is set aside as a liquidation buffer (used as compensation during times when the auction revenue is insufficient to pay for the expenses of the treasury). Additionally, if the money in the surplus account is insufficient to cover bad debts, the platform will then conduct a debt auction using future income as collateral. The debt auction will follow the English auction model (featuring a set opening price, which is raised until only a single bidder remains), and participants are required to bid using BTC.

When bitUSD is issued to a user, they have the option to transfer the asset to other blockchain environments using the bridging procedure described above. With a soft peg to the U.S. dollar, bitUSD can provide utility to DeFi traders across various smart contract chains in a way similar to popular stablecoin, such as 

bitSmiley's lending component, bitLending, is designed to enable 

 (P2P) lending of bitUSD — and, in the future, other assets based on the bitRC-20 standard — in exchange for collateral in BTC and LstBTC liquid staking tokens. bitLending relies on the standard Bitcoin opcodes (pieces of code attached to every Bitcoin transaction with instructions for processing it) to enable the P2P lending exchanges.

Users willing to lend their bitUSD post on bitLending, announcing the amount offered and interest rate sought. If there's a willing borrower for the offer, the parties initiate a transaction, with the borrower providing an overcollateralized security in BTC or LstBTC. The collateral needs to be approved by bitLending. When the borrower has successfully repaid the loan, their collateral will be released. If the borrower fails to repay by the deadline, the collateral is transferred to the lender.

, launched on the Ethereum blockchain on Nov 6, 2024. The token uses Ethereum's 

 standard. The decision to launch the token on Ethereum rather than Bitcoin was mainly driven by the former chain's much more sophisticated smart contract functionality, as well as popularity among DeFi users.

SMILE entitles its holders to participate in the decision-making process on key aspects of the bitSmiley protocol, such as minimum collateral rates, liquidation thresholds and rules, collateral types and more. The token also provides additional benefits and perks for its holders, including fee discounts and exclusive access to discounted auctions. The project team has also announced that SMILE may be used for staking on 

 — a platform that will host a series of DeFi apps focused on bitUSD.

SMILE has a total and maximum supply of 210 million. Of these, one percent (2.1 million SMILE) is reserved for eligible users who earned points during the Pre-season airdrop campaign in May 2024.

The SMILE token is available on Bybit's Spot market as a 

 (dedicated to the token) for the chance to earn a share of the 800,000 SMILE prize pool. Under the terms of the campaign, new users need to deposit at least 200 SMILE — or deposit at least 100 USDT and trade 100 USDT worth of SMILE on their first Spot trade — to qualify for a share of 400,000 free SMILE tokens. Any user can also trade at least 500 USDT worth of SMILE on the Spot market to earn their share of the 400,000 SMILE prize pool. The campaign is valid through Nov 19, 2024, 8:59PM UTC.

Bitcoin's DeFi niche has been growing strongly over the last few years, but many projects dedicated to this area stay within the confines of the still young BTCFi ecosystem. The bitSmiley platform has taken a different approach — instead of trying to rely on the still limited liquidity of Bitcoin, the project's bitUSD crypto serves as a bridge to larger DeFi ecosystems such as Ethereum. 

Intermediate

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bitSmiley (SMILE): Bringing Liquidity to Bitcoin DeFi

A $100,000 Bitcoin could profoundly affect individuals, influencing early investors' wealth and prompting new adopters to manage risks with strategies such as buy-and-hold, dollar-cost averaging, hedging, and diversification.

The meteoric rise of Bitcoin created millionaires and billionaires on its rise to an astonishing price of $68,530 in November 2021. As of Nov 6 2024, it has hit a new 

, driven by election results suggesting a lead for Trump over Harris, though the race remains ongoing.

If Bitcoin keeps climbing and hits that elusive six-figure mark, what would it mean for finance, technology and society? This article will explore the potential scenarios and implications of a $100,000 Bitcoin and consider the factors that could drive or slow its growth, as well as the potential challenges and opportunities.

The $100K Scenario: Feasibility and Timeline

, Bitcoin could reach an all-time high again in the fourth quarter of 2024. A thawing “crypto winter” could

 propel Bitcoin's price to $100,000, based on the following factors: 

Based on historical price movements, BTC halving cycles and other factors, analysts predict that Bitcoin could reach $100,000 or more by late 2024 or early 2025. One common reference point is the next 

 executed around April 2024, which cut miners' block rewards from 6.25 to 3.125 bitcoins. History has shown that Bitcoin tends to surge in price before and after each halving due to a supply shock that boosts Bitcoin's scarcity and value, often hitting new highs within a year. 

Upcoming Events That Could Cause a BTC Price Surge

Some of the possible catalysts that could propel Bitcoin to new highs in the future include the following.

Impact on Individuals and the Global Economy at $100K/BTC

Let’s take a look at the implications of Bitcoin reaching $100,000.

Impact on Early Investors and New Adopters

A $100K Bitcoin would have different impacts on early investors and new adopters, depending upon their goals, strategies and risk profiles. 

Strategies used to trade and invest in Bitcoin will vary, depending upon investor needs and time horizons. Following are a few common strategies.

Individual needs and circumstances determine the impact on financial planning. For some, this could mean achieving early retirement, financial independence or fulfilling their lifelong dreams. For others, it might mean having more savings to support their families and communities. 

If an investor’s portfolio has grown, a plan to rebalance it and sell concentrated positions may be necessary. In general, be careful not to let emotions cloud your judgment, and try to make rational and educated choices about your finances.

Impact on Traditional Financial Systems and Institutions

A potential rise in Bitcoin's value to $100,000 could lead to further excitement and adoption of cryptocurrencies, especially among those who wish to avoid government censorship. However, this shift could also create significant challenges related to consumer protection and financial safety. Governments are still figuring out how to tax and regulate crypto effectively while protecting consumers who are in essence becoming their own banks by holding Bitcoin. 

Achieving such a significant milestone could spark a wave of innovation and competition within the financial industry. Established intermediaries like banks and payment systems may face increasing pressure to provide more on- and off-ramps for Bitcoin. Results could include declining transaction costs, improved speed and efficiency of financial transactions, and new opportunities for financial inclusion and cross-border payments. Still, this surge of innovation may also bring new risks, such as regulatory uncertainties and funding mismatches, because traditional payments lag in speed.

In anticipation of such developments, authorities may consider regulations to rein in or endorse cryptocurrencies. Some governments might opt for restrictive measures, citing concerns over financial stability or consumer protections. Conversely, others might explore developing or adopting state-backed digital currencies to compete with or complement existing cryptocurrencies. For example, certain central banks are exploring the feasibility of issuing their own digital currencies, seeking to combine the benefits of digitization with the trust and oversight associated with the public sector.

Implications for International Trade and Global Currency Markets

With more consumer wealth tied up in Bitcoin, demand for it could increase as a medium of exchange for bigger ticket items like real estate or international trade. This shift could lower fees for international transactions while making real-time payments possible.

Operating independently of any governing authority, Bitcoin has limited supply that shields it from inflation, devaluation or manipulation by any single entity. It may attract individuals seeking to evade censorship or central authority on transactions. 

A $100,000 Bitcoin could introduce new dynamics to the foreign exchange market, generating fresh sources of demand and supply for various currencies. For instance, increased BTC usage for cross-border transactions would necessitate conversions between fiat and digital currencies. This phenomenon could impact exchange rates and the availability of on- and off-ramps for Bitcoin.

Bitcoin's emergence has also spurred innovation and competition within the financial sector, driving the development and adoption of new technologies and services to enhance the efficiency and accessibility of financial systems. The world’s foremost digital currency has also facilitated the rise of alternative financial service providers and platforms offering 

 lending, remittances and crowdfunding, potentially reducing transaction costs while enhancing speed and convenience.

The road to the top can be slick, and Bitcoin faces challenges and risks that could impact its price, adoption and sustainability. 

A $100,000 Bitcoin valuation could shake up cryptocurrency markets and highlight its place as 

 and a store of value. A substantial rise in BTC’s worth could validate Bitcoin’s role as a store of value, easier and more convenient to transact than commodities such as gold.

However, reaching a valuation of $100,000 isn’t guaranteed, and comes with its own risks and challenges. Regulation and scalability could limit its growth, and its volatility could also impact its investability. Additionally, Bitcoin faces competition from other cryptocurrencies and technologies that may offer alternative solutions.

The future of Bitcoin is uncertain — yet also exciting and promising. Bitcoin could become a global reserve currency, a digital gold, a catalyst for change or a tenured relic. Whatever change occurs, the question remains: Are you ready for it?

Beginner

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What If a Bitcoin Were Worth $100K?

Fractal Bitcoin (FB) offers a Layer 2 solution for Bitcoin, enhancing scalability and transaction efficiency through recursive virtualization without compromising security or decentralization.

 (BTC), the world's oldest and largest blockchain, has long been regarded as the most secure platform in the cryptocurrency industry for asset transfers and storage. Over the last few years, innovations such as Bitcoin Ordinals, Runes tokens and the BRC-20 standard have further contributed to the chain's ecosystem diversification. However, despite its status as the industry leader and benchmark, Bitcoin suffers from several significant limitations, including poor scalability, network congestion and rising transaction fees.

 platform that builds directly on Bitcoin's technical foundation, Bitcoin Core, to address the issues of the blockchain's limited scalability and transaction inefficiency. Using an architectural setup known as recursive virtualization, the Fractal project aims to improve the scalability and efficiency of Bitcoin transactions without compromising the blockchain's famed security and decentralization advantages. Fractal could potentially be a key evolutionary development for the broader Bitcoin ecosystem as it's the first Layer 2 solution that directly leverages the blockchain's core technology without being a fork of it.

 (FB) is a Layer 2 Bitcoin scaling solution designed to enhance Bitcoin's scalability and extend its functionality while maintaining its core security and decentralization benefits.

 Set up as a sidechain platform, Fractal directly leverages the Bitcoin Core code.

Fractal Bitcoin uses recursive virtualization technology in its architectural setup to offer multiple layers that operate independently while remaining connected to the Bitcoin network. It's the first and only Bitcoin scaling solution that applies virtualization within the Bitcoin ecosystem. Each layer operates independently, leveraging Bitcoin's underlying 

. This ensures that Fractal is capable of offering its scalability benefits without sacrificing the security of transactions.

Layers can be spun off as needed, creating a truly flexible and scalable platform for conducting Bitcoin transactions. Additionally, Fractal's sidechain supports 

 functionality, opening the way to using 

The project launched its mainnet operations in September 2024. It's been developed and is actively supported by the team at the UniSat Wallet project, a crypto wallet solution for the Bitcoin ecosystem.

Fractal Bitcoin's core technology is based on recursive virtualization. Virtualization, in general, lets you create virtual instances of a system, in this case virtual replicas of the Bitcoin chain. “Recursive” indicates that these virtual instances (or layers, using the project's terminology) can be created continuously, launching layers that operate independently of each other. In theory, this allows Fractal to scale unlimited layers recursively within the overall technical capacity restrictions of the platform.

Each virtual layer runs its own processes without clogging up the main Bitcoin network. The layers are designed to process each transaction block in 30 seconds, which is considerably faster than Bitcoin's own 10-minute block intervals.

The use of virtualization as a scalable computing system, along with the smart contract capabilities of the Fractal Bitcoin platform, enables a variety of use cases, including solutions in 

Fractal has also integrated support for the 

. CAT20 lets Fractal developers create fungible tokens with high levels of built-in security, adherence to Bitcoin's consensus, compatibility with the blockchain's native

 (UTXO) model and the capacity to support complex composable transactions.

Fractal also supports three highly popular Bitcoin asset types: BRC-20 tokens, Runes tokens and Bitcoin Ordinals. Users and issuers of these assets can take advantage of Fractal's superior scalability and quick confirmation times, a key consideration given the frequent complaints about these tokens’ activity congesting the Bitcoin network.

 tokens are fungible Bitcoin assets created by inscribing token data into Bitcoin 

, the smallest units of a Bitcoin. Introduced in March 2023 and based on Bitcoin Ordinals theory, BRC-20 tokens are commonly created as 

. Fractal Bitcoin fully supports this token standard on its own platform.

However, Fractal's BRC-20 tokens have to follow a somewhat different naming standard from the one used by BRC-20 assets issued directly on Bitcoin. These differences primarily relate to ticker names being limited to 6–12 bytes, and rules governing what characters may be used for the tickers. In terms of their functionality, Fractal-based BRC-20 assets are similar to their Bitcoin-based counterparts.

 are another highly popular fungible token variation on Bitcoin. Unlike BRC-20 tokens, Runes don't use Ordinals inscription methodology, and are instead based on Bitcoin's native UTXO model. Thanks to this distinction, Runes are considered a more lightweight, low-footprint way of issuing and using Bitcoin-based fungible assets.

Fractal Bitcoin directly supports these assets as well, and Fractal-based Runes are etched, minted and used in the same way as on Bitcoin to create a familiar environment for Runes enthusiasts. Unlike BRC-20, Runes tokens' tickers on Fractal are no different from the naming standards used on Bitcoin.

, a technology that has enabled Bitcoin-based NFTs, are also available on Fractal, and in the same format as on the Bitcoin blockchain. One user-friendly way to create inscriptions on Fractal is through the Fractal Bitcoin wallet on the UniSat platform.

 features a step-by-step procedure that makes issuing Fractal Ordinals inscriptions accessible even to users with no understanding of the technical details behind this technology. You can also trade these assets via the UniSat Marketplace on Fractal.

The Fractal Bitcoin platform was created by the UniSat team, so it's no wonder that the UniSat Wallet is the primary vehicle for navigating the platform's ecosystem and carrying out transactions on it. The UniSat Wallet supports the issuance of BRC-20 tokens, Ordinals collections and even Names — inscriptions designed to register simple, human-readable identifiers on Bitcoin. 

As noted earlier, the wallet also provides access to the UniSat Marketplace on Fractal, where any asset type supported by the wallet can be easily traded. In addition, the wallet supports inscription-based assets — BRC-20 tokens, Names, Ordinals Inscriptions — directly on Bitcoin.

Fractal's native crypto token, FB, can be 

 along with Bitcoin. The platform uses a 

 methodology called Cadence Mining, a type of hybrid mining that enables miners to validate blocks on Fractal while also contributing to the security of the Bitcoin chain without needing additional resources.

To participate in FB mining, you need to use specialized machines called 

, and preferably join a mining pool to improve your chances of earning rewards. You’ll also need to set up a Bitcoin address via the UniSat Wallet, to which your mining rewards can be sent.

Note that in Fractal's mining system, only one-third of blocks are mined in a merged format with Bitcoin. The other two-thirds are mined entirely on Fractal Bitcoin in a permissionless manner by switching the mining machine's resources entirely to the Layer 2 chain.

The standard mining reward on Fractal (valid since the launch of the chain's mainnet in early September 2024) is 25 FB (around $165). Although this is vastly lower than Bitcoin's reward of 3.125 BTC (currently worth $194,977), Fractal's mining difficulty is also a lot lower than Bitcoin's. This means that the frequency of successful block mining on its sidechain is likely to be significantly higher than on Bitcoin. The frequency of successful mining is also boosted, thanks to Fractal's 30-second block intervals vs. Bitcoin's 10-minute mining cycles. The lower difficulty also creates opportunities for miners whose machines aren't powerful enough to mine BTC.

 rule. While the Bitcoin mining reward is halved approximately every four years, Fractal halvings are designed to take place every two years. The Fractal Bitcoin chain's mining reward is scheduled to reduce to zero some time in 2042.

Fractal Bitcoin’s native cryptocurrency, FB, is used much in the same way as the BTC coin is utilized on Bitcoin. FB serves as an asset to reward miners for helping to secure Fractal’s network. It's also used as the chain's primary asset for transactions and value storage. For instance, items listed on the UniSat Marketplace can be traded using FB coins.

FB's tokenomics also follows that of BTC quite closely, with a supply cap in place and the mining procedure used to gradually increase total supply. The maximum supply for FB is specified at 210 million, with half the supply allocated to mining rewards. Overall supply distribution shares are indicated in the chart below.

In early September, just before its Mainnet launch, Fractal 

 to eligible UniSat and OKX wallet users.

The FB coin is available on Bybit as a Perpetual contract with USDT (

 are derivatives with no expiration or settlement date.

Under the contract, you can trade FB with up to 12.5x leverage. Please 

, which offers potentially higher returns with associated higher risks.

To trade FB as a Perpetual contract, you can head to the

tab on the Bybit official homepage, then navigate to 

 from the menu. If you don't have a Bybit account, you can easily 

 to trade from hundreds of cryptocurrencies and crypto products available on Bybit's Spot and Derivatives markets.

As of Oct 10, 2024, the FB coin is trading at $6.60, or 83.1% lower than its all-time high of $38.80 on Sep 15, 2024, and 2.5% higher than its all-time low of $5.70, recorded earlier on Oct 10, 2024.

Despite its recent faltering price levels, long-term price forecasts for FB are largely bullish. DigitalCoinPrice 

 of $16.87 in 2025 and $49.50 in 2030, while CoinCodex 

 to surge to a high of $30.69 in 2025 and soar to $42.59 in 2030.

The Fractal Bitcoin network is the first and only native scaling solution completely based on the underlying technology and code of the Bitcoin main chain. This creates opportunities for DApps, along with use cases that are tightly aligned with Bitcoin's own environment and ethos. Recursive virtualization is a unique approach that further sets this project apart in the world of Bitcoin-focused Layer 2 solutions. Virtualization as a scalability- and compatibility-enhancing solution has been around for decades, and long predates blockchain technology itself. The team at UniSat are the first to ingeniously recognize virtualization's great potential for blockchain, specifically for Bitcoin.

Fractal Bitcoin is still a new project, in the early months of its market presence. As Fractal gradually extends its reach to attract more Bitcoin enthusiasts and projects, we’re likely to see a growing appreciation in the industry for the platform's innovative architectural approach.

Fractal Bitcoin (FB).png

Fractal Bitcoin (FB): Scaling Bitcoin for Infinite Growth

The CAT20 token standard leverages Bitcoin's security and UTXO model to build advanced Bitcoin-based fungible tokens with high composability and smart contract-like functionality, 

 (ETH) blockchain appeared on the horizon in 2015 with its 

 (DApps), many in the blockchain industry assumed that 

 (BTC) would eventually fade into obscurity. The world's oldest blockchain simply didn't have any of the novel features that its younger rival boasted. Fast-forward to nearly a decade later, and several innovative protocols and token standards have ushered in the era of a totally new Bitcoin, one featuring its own NFTs, fungible tokens and even smart contract–like functionality.

 protocol has enabled Bitcoin-based NFTs. The BRC-20 token standard, based on the same ordinal inscription theory, then introduced the ability to create fungible tokens on the chain. Soon afterward, the 

 protocol opened up a way to create fungible assets much more lightweight than 

 tokens. With all of these innovations, it seems that Bitcoin has finally found its groove in the new blockchain world.

In September 2024, another potentially paradigm-changing token standard, CAT20, was proposed for the Bitcoin network. CAT20 allows developers to create Bitcoin-based fungible tokens that adhere to both the blockchain's native standards and the 

 (UTXO) model, while introducing high composability levels, creating opportunities for complex smart contract–like functionality.

 is a new proposed fungible token standard for the Bitcoin blockchain (

The standard was proposed in September 2024 by the CAT Protocol team, and is applicable to any blockchain that supports the OP_CAT opcode. Opcodes are special scripts that instruct blockchain transactions to perform certain operations. The Bitcoin blockchain supported the OP_CAT opcode until 2010, when the platform's anonymous founder, 

, removed it due to security and transaction efficiency concerns.

Currently, there's a revived interest in OP_CAT within the Bitcoin user community, and several parties have proposed its reintroduction. If OP_CAT is re-enabled on Bitcoin, CAT20 will likely move from a proposed state to a fully implemented standard on the chain. Among the blockchain networks that currently support it is Fractal Bitcoin (FB), a 

 sidechain solution that supports higher speeds and scalability levels for Bitcoin transactions.

The recently proposed CAT20 standard is not to be confused with the much earlier (and unrelated) CAT20 standard for compliant security tokens and tokenized securities, 

To understand CAT20 tokens, it's crucial to be aware of what the OP_CAT opcode does. Originally available on Bitcoin, it lets developers con

enate (hence the name) two pieces of data together, potentially opening a way to create complex transaction functionality. However, OP_CAT also has a certain potential to be exploited for running denial-of-service (DOS) attacks and congesting the Bitcoin network.

Due to these vulnerabilities, Satoshi Nakamoto disabled OP_CAT, along with several other opcodes. OP_CAT, which the CAT20 standard heavily relies on, still isn’t functional on Bitcoin as of early October 2024. The primary rationale behind Nakamoto's decision probably lay in the desire at the time to keep Bitcoin strictly an environment for secure asset transfers and storage.

However, in the past few years, the blockchain has moved beyond its original state, with protocols and standards like BRC-20, Runes and Ordinals Inscriptions ushering in an era of a higher degree of network activity. Additionally, a variety of Bitcoin-linked Layer 2 solutions have contributed to the chain's ecosystem development. 

With all of these technologies now fully operational on the Bitcoin network, many of its community members have questioned the need to keep OP_CAT disabled.

At the end of the day, if BRC-20 tokens are allowed to proliferate on the chain, and various Layer 2 protocols have introduced smart contract-like functionality for it, why would an exception be made for OP_CAT? Voices clamoring to re-enable OP_CAT are growing louder by the day, and there's an expectation that the opcode may be switched back on. 

If and when that happens, CAT20 can support the creation and use of Bitcoin tokens with a significant degree of composability. Significantly, this could open up opportunities to leverage a variety of DApps within the Bitcoin ecosystem.

How Does the CAT20 Standard Affect the Bitcoin Blockchain?

Because CAT20 tokens are highly composable and modular, they could significantly increase the sophistication of Bitcoin transactions, potentially paving the way for full-fledged DApp functionality directly on the network.

At the same time, the ability to provide sophisticated functionality may lead to congestion on the network, due to the amount and complexity of operations these tokens are capable of producing. Bitcoin already struggles with the new standards and protocols — BRC-20, Runes and Ordinals Inscriptions — that have led to a large spike in activity on its network. The introduction of CAT20 tokens on the blockchain could further increase traffic levels.

CAT20 tokens adhere to Bitcoin's underlying security mechanism, which is based on the 

 (PoW) mining procedure. It’s been instrumental in establishing the blockchain's reputation as a highly secure transactional environment. By leveraging PoW, CAT20 tokens would ensure that their operations are protected to the same level as native BTC assets.

Besides PoW, another element that ensures Bitcoin's security is its well-regarded UTXO transaction model, whereby Bitcoin balances and transfers are represented by outputs from earlier transactions. CAT20 tokens are based on UTXO and directly leverage Bitcoin's own script at 

. This means that these tokens don't need to rely on off-chain indexers — software used to organize transactions and simplify the querying of the blockchain.

The CAT20 standard creates opportunities for cross-chain operations, as it can be implemented on any network that supports the OP_CAT opcode. We noted above that the Fractal Bitcoin Layer 2 sidechain is an example of a network with OP_CAT support. Besides Fractal Bitcoin, there are two notable Bitcoin forks with OP_CAT functionality enabled — 

CAT20 tokens have built-in functionality to support simplified payment verification (SPV). This technology allows lightweight clients such as mobile phones to verify the authenticity of CAT20 tokens in a decentralized and efficient way.

Although CAT20 holds certain potential for cross-chain interoperability, the existing network of chains that support OP_CAT (and which could thus theoretically support CAT20) is quite limited. The Fractal Bitcoin project is a new Layer 2 solution, still in the early stages of its market presence, while Bitcoin Cash and Bitcoin SV are minor players in the world of smart contract–capable chains. These two platforms both support some degree of smart functionality using their own unique mechanisms. 

Still, their DApp capabilities are far behind those of Ethereum and other smart contract chains, such as 

 (SOL). As such, the token standard's potential reach is relatively restricted, especially since OP_CAT is still not operational on Bitcoin itself.

CAT20's ability to support complex, composable functionality can potentially lead to network congestion, due to both the large amount of processing required and the general increase in demand for DApps. Bitcoin already struggles with the issue of congestion, and the introduction of CAT20 might exacerbate this problem. 

The chart below shows the number of Bitcoin transactions over the past three years (to Oct 6, 2024). It’s impossible to miss the gradual rise in network activity over the previous year or so:

The CAT20 standard is still in the early stages of its development. It’s been newly introduced and promoted by the CAT Protocol, and many practical details of its implementation have yet to be defined or made public.

The rise in on-chain activity and DApp usage that CAT20 could spur would likely affect not only network congestion levels, but also transaction costs. Bitcoin is already facing increases in these costs, due to the flurry of activity related to BRC-20 tokens, Runes tokens and Ordinals Inscriptions NFTs. With the arrival of CAT20, the costs of transacting on Bitcoin may rise further.

CAT20 has a number of advantages over the BRC-20 fungible token standard. First, unlike BRC-20, CAT20 requires no off-chain indexers. With all of its operations conducted strictly on-chain, CAT20 tokens enjoy both higher efficiency and a better security profile than BRC-20 assets do. Additionally, CAT20 technology allows for far more flexible and sophisticated functionality than what the BRC-20 token standard can provide.

CAT20 tokens share certain similarities with Runes, another highly popular fungible token variety on Bitcoin. Both tokens largely leverage the on-chain environment for their functionality, although Runes does require indexers while CAT20 doesn’t. Both standards can be lightweight, though in the case of CAT20 it largely depends upon the actual token design and intended functionality. In addition, both Runes and CAT20 tokens leverage Bitcoin's UTXO model.

However, the critical difference between these two token technologies is that CAT20 tokens can be used to enable fairly sophisticated DApps, ranging from 

 protocols. In contrast, the Runes protocol has mostly been confined to supporting 

ARC-20 is a standard designed for fungible tokens that supports digital ownership management and asset representation for collectibles and NFTs. While ARC-20 is a fungible token standard, its main focus is on digital representation for distinct items and NFTs. In contrast, CAT20 is designed for fungible tokens with diverse applications and use cases. 

While both token standards could potentially have use cases in 

 (DeFi) or other DApp niches, CAT20 assets are capable of supporting more sophisticated and programmable functionalities.

As of the time of this writing Oct 8, 2024), the future of the CAT20 standard is highly dependent upon whether and when the OP_CAT opcode is re-enabled on Bitcoin. This will be determined by the overall Bitcoin community via online discussions and proposal deliberations. Unlike some chains with highly structured on-chain governance processes, Bitcoin has a flexible, mostly off-chain and less structured process of making decisions on matters as important as the reintroduction of critical opcodes.

CAT20 was proposed in September 2024 and active discussions are ongoing. It might take the Bitcoin community a few weeks or months to decide on this issue. Of course, there's always the possibility that OP_CAT’s proposed reintroduction could either be rejected or left in limbo for an extended period.

The CAT20 standard is a significant step forward for Bitcoin, due to CAT20’s potential for relatively sophisticated programmability, reliance on Bitcoin's underlying security mechanism, UTXO-based nature and cross-chain interoperability. However, concerns about network congestion and rising transaction fees are running high within the Bitcoin community right now, primarily due to the avalanche of activity related to BRC-20, Runes and Ordinals Inscriptions. 

Nevertheless, there's hope that the Bitcoin community is capable of distinguishing between technologies that are mostly suitable for meme coin acrobatics, and those that can provide useful DApp-like functionality. At the very least, the team at CAT Protocol hope so — and will be keeping their fingers crossed. If OP_CAT is re-enabled, expect CAT20 tokens to become a new hit on the world's largest blockchain network.

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What Is the CAT20 Standard & How Does It Work?

The Bitcoin Power Law Theory is a mathematical model proposing that Bitcoin's price follows a power law distribution over time. Learn more here.

Bitcoin's meteoric rise has positioned it as 

 that challenges traditional financial markets and captures investors' imaginations worldwide. But in a market known for volatility, how can we accurately forecast Bitcoin's price?

This article reviews one novel approach that could help us answer that question: the Bitcoin Power Law Theory (BPLT). We'll explore how this mathematical model works, its potential for predicting Bitcoin's price, its limitations and what the model indicates about Bitcoin's future.

The Bitcoin Power Law Theory is a mathematical model which proposes that Bitcoin's price follows a power law distribution over time. It uses logarithmic scales and regression analysis to predict long-term price trends, similar to patterns observed in natural phenomena.

How Does the Bitcoin Power Law Theory Work?

The Bitcoin Power Law Theory operates on the principle that Bitcoin's price follows a power law distribution. In physics, power laws describe relationships in which a relative change in one quantity results in a proportional relative change in another.

By applying this principle to Bitcoin, Giovanni Santostasi, BPLT’s creator, has hypothesized that Bitcoin behaves more like a physical system that follows a predictable pattern over time. Here's a detailed breakdown of how the theory works:

Estimated Price = A * (days from Genesis Block)

The BPLT suggests that this power law relationship extends beyond just price. Santostasi observed similar power law behaviors in other Bitcoin metrics, such as the growth of 

 (computing power of the network) and the new wallet address creation rate.

It's important to note that while the model provides a framework for long-term 

, it doesn't account for short-term volatility or external factors that could influence Bitcoin's price. The theory assumes that over long periods, these fluctuations average out, revealing an underlying growth pattern governed by the power law.

How to Interpret the Bitcoin Power Law Theory Model

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