Maxwell's Warning: Why 'The Cat' Proposal Divides Bitcoin Developers

The Bitcoin community is grappling with a controversial improvement proposal that challenges fundamental principles about transaction data management. This proposal seeks to permanently remove millions of unspent transaction outputs (UTXOs) from circulation to combat the growing problem of blockchain bloat caused by ordinals and inscriptions.

The Problem It’s Trying to Solve

The proposal targets a real issue: spam transactions now comprise between 30% to 50% of all UTXOs on the network. These parasitic outputs accumulate as users create inscriptions—a practice that fills blocks with non-monetary data. By marking small UTXOs as permanently unspendable and removing them from the UTXO set, developers believe they can reduce network overhead and maintain Bitcoin’s scalability.

The Censorship Resistance Concern

However, not everyone sees this as a solution. Developer Greg Maxwell and other protocol purists have raised alarm bells about what they view as a troubling precedent. Their concern centers on a darker question: if the protocol can unilaterally invalidate certain UTXOs, what’s to prevent similar mechanisms from being weaponized against specific addresses or transaction types in the future?

Maxwell specifically warns that embedding “asset seizure” capabilities at the consensus layer could fundamentally undermine Bitcoin’s most valuable property—censorship resistance. Once you normalize the idea that the network can destroy coins based on predetermined criteria, you’ve opened a door that becomes increasingly difficult to close.

Two Visions of Bitcoin’s Future

The debate ultimately reflects a deeper philosophical split. One camp prioritizes pragmatism: clean up the ledger, reduce bloat, maintain performance. The other prioritizes principle: preserve absolute property rights and never allow the protocol to confiscate funds, regardless of intent. Both sides make valid points, but they’re increasingly incompatible visions of what Bitcoin should be.

As this discussion continues, the Bitcoin development community faces a critical choice about which values to prioritize.