New Bitcoin Proposal Could Permanently Ban Ordinals and NFT Transactions

A controversial Bitcoin development proposal to permanently eliminate Ordinals inscriptions and Bitcoin Stamps has sparked fierce debate within the developer community.

The draft, known as “The Cat,” would mark millions of dust-sized outputs containing NFT data as permanently unspendable through a consensus-level soft fork.

The proposal targets what its author, Claire Ostrom, describes as an unprecedented explosion in Bitcoin’s UTXO set.

Between 2009 and early 2023, the UTXO database grew gradually to roughly 80-90 million entries.

Within just one year, it doubled to over 160 million entries, with analyses suggesting nearly half of all UTXOs now contain less than 1,000 satoshis.

The Cat would identify these outputs using external indexers like Ord and Stamps, then render them permanently unspendable while allowing nodes to prune them from the UTXO set entirely.

Maxwell Calls Proposal “Outright Theft”

Bitcoin Core developer Greg Maxwell delivered harsh criticism, calling the proposal a “total non-starter” that would constitute theft.

“The proposal would intentionally and knowingly confiscate millions of dollars in funds,” Maxwell wrote in response to the Bitcoin development mailing list.

Maxwell disputed claims that spam filters are ineffective, arguing that the current setup already blocks most pointless data storage, except for uses that are more valuable because of Bitcoin’s limitations.

He warned the proposal would likely trigger a flood of evasion transactions while failing to stop NFT trading, since indexers operate independently of consensus rules.

“NFTs are just an imaginary parallel world that don’t depend on the network to validate their activity,” Maxwell explained.

The legendary developer also criticized the proposal’s length and technical complexity, suggesting it should have been floated as a simple question about discouraging NFTs rather than dense technical documentation.

He pointed to the potential misuse of language models, leading to unnecessarily complex proposals that waste participants’ time.

Supporters See Essential UTXO Cleanup

Bitcoin Mechanic, a prominent anti-spam advocate, offered cautious support despite acknowledging philosophical concerns about UTXO deletion.

“I don’t consider it unreasonable for Bitcoin users to do this if they see fit as the UTXO set is something that they must contribute resources to maintaining in perpetuity,” he wrote.

The proposal’s supporters emphasize that between 40-50% of the UTXO set consists of spam outputs with dust amounts.

Removing these would provide substantial disk space savings, particularly for maximally pruned nodes.

Developer Nona YoBidnes argued the proposal would send a strong signal to discourage future spam activity.

“Less spam is the objective here. I’m not concerned with the price of spam, only the quantity,” Nona stated.

However, supporters acknowledge the unprecedented nature of consensus-level UTXO deletion.

Bitcoin Mechanic noted that while spam filters can be easily fixed if misconfigured, mistaken UTXO deletion would be catastrophic.

The proposal addresses this by imposing extensive verification requirements and encouraging the community to independently validate snapshots of the targeted outputs.

Alternative Proposal Emerges

A competing proposal called “Lynx” by Matteo Pellegrini takes a different approach, suggesting periodic cleanup tied to Bitcoin’s halving schedule rather than targeting specific protocols.

At each halving, UTXOs below 999 satoshis that remained unspent for 4 years would become permanently unspendable.

Pellegrini argues this threshold-based method avoids The Cat’s reliance on external indexers and protocol-specific targeting.

“By using a threshold rather than a list, Lynx requires no external indexers, makes no judgment about why a UTXO is small, and applies equally to all participants,” the proposal states.

Maxwell also rejected Lynx, noting that dust thresholds aren’t consensus parameters and that predictably inactive outputs have minimal performance impact.

He suggested the mailing list should ban future proposals to confiscate coins for a year, warning that they risk undermining public confidence in Bitcoin.

Escalating Battle Over Bitcoin’s Purpose

The controversy follows months of escalating tensions over Bitcoin’s role.

Earlier this year, Ordinals leader Leonidas threatened to fund a Bitcoin Core fork if developers attempted censorship, claiming support from miners controlling over 50% of the hash rate and startups that contributed over $500 million in transaction fees since 2023.

The same month, Developer Jimmy Song also criticized the earlier Taproot upgrade for creating a “social attack surface” that enabled spam-like activity, arguing it failed to deliver on privacy promises while opening the door to nonfinancial transactions.

Meanwhile, the October Bitcoin Core v30 upgrade removed the 80-byte OP_RETURN limit, enabling data payloads of up to 4MB per transaction.

The change also sparked an exodus to Bitcoin Knots, an alternative implementation that now represents 28% of the network.

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