What Is the CAT20 Standard & How Does It Work?
When the Ethereum (ETH) blockchain appeared on the horizon in 2015 with its smart contract functionality, non-fungible tokens (NFTs) and decentralized apps (DApps), many in the blockchain industry assumed that Bitcoin (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.
Over the past two years, the Bitcoin Ordinals 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 Runes protocol opened up a way to create fungible assets much more lightweight than BRC-20 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 unspent transaction output (UTXO) model, while introducing high composability levels, creating opportunities for complex smart contract–like functionality.
Key Takeaways:
CAT20 is a new proposed fungible token standard for Bitcoin. Among the advantages of CAT20 tokens are their ability to support relatively sophisticated composability, Bitcoin-level security, cross-chain interoperability and compatibility with the blockchain's UTXO transaction model.
CAT20 tokens can function on any chain supporting the OP_CAT opcode (operational code), which is currently disabled on Bitcoin. Discussions in the community are ongoing about whether OP_CAT should be re-enabled on the Bitcoin blockchain.