Bitcoin is getting weird(er).

#Web3Weekly: May 21–27, 2023

This post is adapted from the latest edition of my newsletter #Web3Weekly. If you would like to receive it in your inbox every Sunday, subscribe here.

#Web3Weekly is glad to be a media partner of the Epic Web3 Conference, coming up June 9 in Lisbon. This can’t-miss event will feature an amazing lineup of speakers from every facet of the web3 space, as you can see from the graphic below.

As a special offer to our readers, Epic Web3 is offering a 15% discount when you purchase a Full or VC pass to their conference. To redeem the #Web3Weekly discount, be sure to apply the code WEB3WEEKLY at checkout when you purchase your ticket here.

EW3 is shaping up to be a truly amazing event, so be sure to get your pass ASAP. Book your discounted pass today!

There is no question that Bitcoin’s pseudonymous creator Satoshi Nakamoto intended it as an “electronic cash system.” The term is right there in the title of his whitepaper from 2008.

So how did the Bitcoin network end up storing artwork like this image of what appears to be a zombie samurai?

Enter Ordinals, a protocol launched in January 2023 that allows someone to turn the smallest tradeable unit of a bitcoin, called a satoshi, into a non-fungible token. This is done by inscribing additional information onto that satoshi using Bitcoin’s shared ledger, stuff beyond the purely transaction-related data that capital-s Satoshi originally envisioned.

What’s ensued since the launch of Ordinals is either pure awesomeness or utter sacrilege, depending on your view of Bitcoin.

Ordinals inscriptions have exploded, turning Bitcoin into the number-two network for NFT activity overall, behind only Ethereum and ahead of earlier contenders like Solana. But that’s also meant slower traffic and higher fees across the entire Bitcoin network, infuriating “traditional” users who just want to use bitcoin as money.

Even Peter Schiff, a gold-focused money manager and vocal bitcoin critic, unveiled a new Ordinals artwork collection on Friday, created in partnership with an artist who goes by the handle Market Price. (Subtle!)

Meanwhile, the startup Stably on Monday begain issuing a dollar-backed stablecoin using Ordinals. So now we effectively have U.S. dollars trading on the Bitcoin network.

That definitely isn’t something Satoshi ever intended. But I suspect many similar surprises are yet to come.

The week’s other notable headlines:

• Bankruptcy updates: Fahrenheit won the bidding for bankrupt crypto lender Celsius, which still holds $500 million of liquid cryptocurrency on its books, according to Fortune. Separately, troubled Digital Currency Group missed a $630 million payment due to Gemini. And DCG said it will shut down its institutional trading unit TradeBlock.
• WTF is going on with Tether? The data firm Kaiko notes that the popular stablecoin’s market valuation is nearing a record over $80 billion even though trading volume has been relatively weak in 2023. Decrypt reports that rising usage of Tether on the Tron network for decentralized finance apps may be driving the valuation increase. Separately, Tether’s parent company recently announced it is shifting its reserve strategy away from purchases of U.S. government debt and toward crypto, including bitcoin.

• Bitcoinist reports that Ethereum “whales” have accumulated $9 billion in ETH so far this year, spurred in part by the network’s transition to a new Proof of Stake consensus mechanism. The report is based on data from the analytics firm IntoTheBlock, which defines an ETH “whale” as any single wallet that controls more than 0.1% of token supply.
• Wallet maker Ledger delayed a controversial software update that would increase users’ ability to recover their crypto keys. However, critics say the changes would also make wallets less secure.
• OpenAI CEO Sam Altman’s crypto startup Worldcoin raised $115M.
• Ava Labs launched a “no-code” web3 platform for businesses to build decentralized apps without having to code them from scratch.
• Hong Kong is the world’s most crypto-ready jurisdiction, followed by the U.S. and Switzerland, according to a new report by the trading education platform Forex Suggest.
• JPMorgan Chase has applied for a trademark on a finance-focused AI chatbot called IndexGPT.
• Browser maker Brave is launching private video conferencing secured with NFTs.
• Princess Leia’s dress from A New Hope is up for auction. The item, which was (ahem) “removed” from the movie’s set in 1977 by a crew member, is expected to fetch $2 million. The auction will also feature props from The Dark Knight, Blade Runner, Guardians of the Galaxy. and Poltergeist, according to The Hollywood Reporter.

That’s it for now. Thanks for reading the newsletter today! If you want to receive updates like this in your inbox every Sunday, please join our email list.

Note: #Web3Weekly content is intended for journalistic purposes only, not as investment advice. Always DYOR and consult appropriate financial professionals before making investment decisions.

Best wishes for a healthy and productive week ahead.