#70 | The First Bitcoin NFTs??

Estimated Read Time: 10 minutes

Hey friends,

Great to have you back today! This time around we have a bunch of recent blockchain-themed stories from our Brew-Up to Bitcoin NFTs and the NFT battle of Polygon versus Ethereum. Let's jump into it!

The Blockchain Brew Up ☕

Crypto has been holding nicely, with both Bitcoin and Ethereum in the green over the past week, especially since trading volume has seen an uptick following the Federal Reserve raising its benchmark interest rate. This rate hike saw an increase of a quarter percentage point in an effort to bring down inflation that, despite recent signs of slowing, is still running near its highest level since the early 1980s. Bitcoin and Ethereum respectively saw 40% and 60% increases in volume compared to the day before the rate increase announcement, hinting at an improved conviction in these “inflationary proof” stores of value.

Last week the brew covered the government’s use of digital currencies, and today has yet another story pushing the boundaries of blockchain technology and its transparent ability to record transactions. There has been major recent funding of the blockchain network TradeWaltz from some big players like Japan's leading trade company Marubeni and Japan's largest bank MUFG.

So what's the deal? This blockchain trade solution TradeWaltz aims to digitize the paper-heavy cross-border trade process and says its blockchain solution improves operational efficiencies by more than 44%. TradeWaltz already has over 160 companies in its network, and it's great to see the blockchain be used to better standardise industries that may not come to mind in Web3 like large trade.

In another recent blockchain development, Inter-American Development Bank (IDB) has funded the LAC PropertyChain and just undergone a pilot program in Peru, Bolivia and Paraguay. The LAC PropertyChain uses the blockchain with an aim to improve the transparency of property records and streamline the paper-based registration process. For context, there are countries like Peru where real estate fraud is a major issue in falsifying any and every type of property documents. These frauds, particularly insider frauds, sometimes are only uncovered later because of a lack of transparency, which is where the blockchain can save the day. Not only does the blockchain help security through the transparent record of transactions, but inevitably any real estate transaction has numerous participants between registries and participants, a shared infrastructure using blockchain can also drastically speed up the process.

Steaming Headlines ♨️

Bitcoin NFTs??

Bitcoin NFTs. Quite an interesting blend of ideas that have actually been around for a while, but thanks to a newly launched protocol Ordinals, for the first time Bitcoin can now mint and store an NFT with a real image. Thanks to upgrades that Bitcoin went through a couple of years ago, Ordinals found a way to store information in a Bitcoin transaction beyond what the protocol used to allow and hence now enabling the ability to have images on the BTC chain.

There's a reason proof-of-stake blockchains like Ethereum, Solana, or Polygon have dominated the current state of NFTs. It’s because these more efficient blockchain protocols have an easier time storing the large amounts of necessary data for NFT smart contracts, while also having mechanisms that facilitate these larger transactions in a much cheaper way. Bitcoin is on a proof-of-work consensus mechanism, which currently takes a lot more power and effort to authenticate transactions, hence the higher costs that miners can charge in return.

Colin Harper from crypto-mining service Luxor says “Ordinal NFTs are contributing to the rise in transaction fees we’ve seen this week, transaction fees wouldn’t be as high as they are currently if it weren’t for the sudden influx of Ordinal NFT transactions”. Indeed, they are high with the blockchains fees reaching the highest they have ever been in over a year.

This use of the popular cryptocurrency has sparked a lot of controversy with some labelling it as a waste of encoding and only enabling a proof-of-consumption. For the Bitcoin community, the recent Ordinal development has rehashed a long-standing debate around whether the chain should only be reserved for recording financial transfers, as these NFTs are data-hungry in turn taking up a much bigger chunk inside each block to get processed and pushing up the fees.

On paper, bringing NFTs to the world's first and most popular blockchain doesn't sound like that bad of an idea, and Ordinals protocol creator Casey Rodarmor would agree where in regards to the beneficial concept of NFTs.

And he has no doubt succeeded with Colin confirming “they can be anything from digital images to videos and even video game files, Ordinal NFTs (also called inscriptions) include more data than a standard Bitcoin transaction”. There's lots to cover with the world's biggest blockchain having its NFT floodgates open, who knows how it will turn out, but more and more eyes on this revolutionary technology is never a bad thing.

Polygon Beats Ethereum In NFT Sales For Two Consecutive Months

In a quick story to round off this blockchain-themed edition, the Ethereum side-chain Polygon has sold more NFTs to users than Ethereum for the second month in a row, according to Dune. In January, Polygon had 1.5 million NFT sales, up from 1.3 million in December, which just beats out Ethereum's 1.1 million and 1 million sales for the same months respectively. But before you go thinking Ethereum is done for, Ethereum still trumps in OpenSea volume at over $440 million last month compared to Polygon's 1.5 million sales only netting $15 million. It’s worth noting how Polygon has extremely low transaction fees compared to Ethereum, which is why most Polygon transactions were for low-cost items used in Web3 or metaverse games.

All and all, it's no doubt Polygon is continuing to gain some steam and NFTs are only continuing to be transacted with. Good signs all around!

What's the NFTea? 🍵

Checks. That's the tweet.

...nahhhhhh we've written too much about them already. Or may have more stuff to write about them in the upcoming days. All you need to know is that they're up 20x since the last time we mentioned them in Issue #63.

So let's talk about Ryan Carson, who absolutely dominated the news cycle over the past two days with the announcement of his new web3 fund, Flux.

In his since-deleted tweet, he namedrops 21 well-known names in the web3 space and petitions the audience to snag one of the 79 remaining spots in his fund, with $160k commitments for each spot.

The backlash was swift and immediate. Why? Because this all feels extremely played out before, from the same person...

121G Fund was started by Ryan Carson as a hedge fund. Apart from failing to reach the capital target he needed, the only thing he did was to sweep the floors of 3 NFT collections and then proclaim that his fund was in profit simply based off floor price. It is currently 80% down in PnL from its initial amount.

So, the NFT sphere was shocked when it learned that the same man was trying to raise $10M in funds to invest in new web3 ventures — something that he has no track record of accomplishing. What investors get? Allowlists for the incubated projects; similar to what PROOF passes give their holders.

Since the backlash, some of the namedropped investors have stepped up to remove their commitments to Flux due to the poor handling of the matter.

The man also has a reputation from his previous startup ventures from outside web3 as well.

Will the web3 space ever run out of people trying to take money for their own gain? Perhaps not — as with every new technology, there will be bad actors trying to take advantage of an undeveloped market and an audience that is hungry to invest in progress.

If you want to read more about what happened, here's a fantastically written thread to catch you up:

Until next time!

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DISCLAIMER:

None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.