Ordinals, Nostr, Crypto regulation.
INTRO
Welcome to the 2nd edition of The Bitcoin Newsletter
In recent weeks, there has been a surge in non-fungible tokens (NFTs) issued on the Bitcoin blockchain, bringing a level of speculation to the Bitcoin space similar to what has been seen with other blockchains such as Ethereum. In this edition, we will discuss why buying bitcoin itself is a logical decision rather than speculation, explore what has made the Bitcoin-NFT boom possible, and take a look at what decentralised social media could look like with Nostr.
Best regards,
Leon
DEEP DIVE
Buying bitcoin is not speculation.
If you are considering making an investment decision, it is important to have an understanding of how money evolves. By doing so, purchasing bitcoin should not be viewed as speculation. Rather, it is simply a matter of recognising that bitcoin is becoming money with superior monetary properties, and choosing to hold it for this reason. Bitcoin possesses all the technical properties that make for good money, but it will require time to gain the necessary social properties (Arman The Parman, 2021).
In a free market, money evolves naturally through a general process, which is well explained in Vijay Boyapati’s (2018) excellent book “The Bullish Case for Bitcoin”. It begins as a collector’s item, then becomes a store of value, a medium of exchange, and finally a unit of account. Bitcoin started as a collectible within the cypherpunk community and is increasingly being used as a store of value by people worldwide. We are witnessing the early stages of a shift from people storing their productivity in fiat-denominated assets (such as fiat money, bonds, gold, and ETFs) to bitcoin.
As of the time of writing, bitcoin has monetised roughly 0.05% of global wealth. However, it is possible that its adoption rate could reach 10% by the end of the decade and 80% by 2052 (Holmes, 2022). This presents an opportunity. If you adopt bitcoin early as a store of value, your wealth could grow exponentially with bitcoin adoption.
WORTH TO KNOW
Ordinals
Non-fungible tokens (NFTs) on the Bitcoin blockchain have been in existence since 2014, made possible through the Counterparty Protocol, albeit with relative complexity. However, a controversial new protocol called Ordinals has simplified the process of creating NFTs on Bitcoin, leading to a Bitcoin NFT boom and sparking controversy within the community. Many Bitcoiners argue that using Bitcoin for NFTs goes against its primary purpose of bringing financial freedom to the world, and therefore is considered pointless and detrimental to the Bitcoin mission. The NFT data that accompanies transactions takes up space on the blockchain that could otherwise be used for financial transactions, which raises concerns about Bitcoin’s role as an open and accessible payment infrastructure for those who need it most.
In my opinion, the market will ultimately determine whether Bitcoin NFTs or financial transactions are in higher demand, as Bitcoin operates as a free market. Ordinals, Satoshi serial numbers, and NFTs on Bitcoin are explained in greater detail in this VIDEO.
Nostr: decentralised social media.
Nostr is a protocol created by Lightning developer fiatjaf, built on top of the Lightning Network, a “Layer 2” payment protocol for Bitcoin that enables fast transactions and micropayments. Nostr aims to create censorship-resistant social networks and has been adopted en masse by the Bitcoin community. Notably, Edward Snowden posted about it, and Twitter founder Jack Dorsey provided a 14 BTC grant for development. Many Lightning clients, relays, and other services are also experimenting with how Lightning and Nostr can interact.
As E. Snowden puts it, “One of the cool things about Nostr (“Notes and other stuff transmitted by relays”, a new decentralized protocol that replaces things like Twitter and Instagram)—beyond censorship resistance—is that you aren’t limited to 280 characters. Find me there.“
In January 2023, the number of accounts writing notes on Nostr grew to more than 400k, according to Ryan Gentry, Director Of Business Development at Lightning Labs. BTC_Sessions explains what Nostr is and how to set up an account in this VIDEO.
Nostr tips
Damus app if iOS
Profile pic – upload here nostr.build
Nostrplebs.com – register
Alby or Wallet of Satoshi – Lightning Wallet
Follow me: my Nostr PubKey is: npub1v5k43t905yz6lpr4crlgq2d99e7ahsehk27eex9mz7s3rhzvmesqum8rd9
Crypto Regulation
On Thursday, February 9th, the SEC (US Security and Exchange Commission) charged Kraken, a cryptocurrency exchange, for the unregistered offer and sale of securities, due to its staking-as-a-service program. Whether staking-as-a-service, lending, or other services, to operate in the US, crypto intermediaries must now make the disclosures and safeguards required by US security law. This decision and its implications show how vulnerable proof-of-stake blockchains, which are not decentralised like Bitcoin, are to government intervention. I believe that regulations will hit the crypto industry hard. You can watch SEC Chairman Gary Gennsler’s official statement in this VIDEO.
IDEAS OF INTEREST
Bitcoin First
In a recent paper, Fidelity Digital Assets argues why investors should distinguish bitcoin from other digital assets:
“Bitcoin is fundamentally different from any other digital asset. Other digital assets are unlikely to improve upon bitcoin as a monetary good because bitcoin is the most secure, decentralised, and sound digital money, and any “improvement” will inevitably involve trade-offs.”
The paper clarifies the differences between bitcoin and all other “cryptocurrencies” and advises investors on how to act. You can read the full PAPER.
Resources
Vijay Boyapati – The Bullish Case for Bitcoin
Arman The Parman – ‘Bitcoin is Too Volatile!’
Holmes – Bitcoin Could Hit 10% Adoption Rate By End Of The Decade
Photo Credit: labs.openai.com
Disclaimer: the content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. If you like to build on my thoughts, feel free, but please cite me as the source. 2023 – Leon A. Wankum.
If you want to support me. Feel free. You can send me some satoshi/bitcoin.
My lightning address is: law@getalby.com
My bitcoin address is: bc1qyc9q89wjzmvaw729tj3wsrsfhft53mjycrjxdk
