3rd April 2023 - Adoption and stuff.

tl;dr

Bans, crypto adoption, and ordinals.

Market Snap

Market Wrap

harm caused by deliberately moving our reliance for energy away from the North Sea and into the arms of such enlightened countries as Russia, Saudi Arabia, and Iran. Windfall taxes and the madness of the extremity of Net Zero by next Wednesday at the very latest are a dangerous combination for our economic well-being.

Curious Cryptos’ Commentary – That old banning thing

I read that Italy has “banned” ChatGPT.

Good luck with that idea, Meloni, along with the idea that one can ban people from wanting to move to a better life.

Bans just don’t work, be it people, drugs, or cryptos. It’s just the way it is.

Curious Cryptos’ Commentary – Follow-up

The last two CCCs have been about portraying a different view of recent US regulatory action in the crypto space compared to the prevailing common narrative. I have been asked what it means if my contrarian view turns out to be right, and what it means if it turns out to be wrong.

…

Let’s start with the common narrative that the US government and the US regulators are strictly anti-crypto. What will happen?

We have already seen some crypto start-ups shutting down operations in the US to focus elsewhere in the world. Europe, with MiCA (Markets in Crypto Assets) regulations almost ready to go, will be an attractive place for the creation of crypto tax dollars.

Crypto start-ups will be as plentiful going forward as they were in the past, bringing with them all the same problems that we have already encountered. Some will be outright frauds, like FTX, some won’t take compliance rules seriously enough, like Binance, and plenty of crypto focussed hedge funds will be over-leveraged and subject to insolvency risk on an ongoing basis.

Meanwhile, in the US, life will be made increasingly difficult for the sole listed centralised cryptocurrency exchange, Coinbase, whose ambitions will only be realised outside of US jurisdiction.

In this world, the pace of crypto adoption is slowed until such time as the US government becomes more amenable to the crypto revolution, as it surely will one day in the future.

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In my narrative, the US drives out start-ups who are negligent about compliance, in favour of TradFi like Fidelity, and in favour of start-ups who recognise the importance of commodities and securities laws, like Freeport.

In this world, crypto adoption gathers pace in the US, avoiding problems like FTX and Three Arrows Capital, with a rapid move to custodial and trading services provided by trusted partners. In the absence of frauds and bankruptcies the reputational soundness of cryptos returns in the public mind, further driving retail and institutional adoption.

The explosive growth that we could see in that scenario would put the previous all-time high of $69k per BTC firmly in the shade.

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If I am right, that is going to cause a lot of upset to the maximalists.

I have long maintained that cryptos can only flourish in conjunction with fiat, and I have seen nothing that comes even close to challenging that view.

Indeed, I am more convinced than ever that the ultimate success of cryptos does depend upon the level of TradFi involvement. Those who wish to see cryptos usurp fiat will be unhappy with the outcome if that sorry situation were to come to pass.

Like I say, my view is going to upset the maximalists.

Curious Cryptos’ Commentary – Ordinals

This is another topic that maximalists find upsetting.

On the 19th, 20th, and 21st February we took our first look at the world of ordinals. This is a technological development allowing for inscriptions to be made on an individual Satoshi, in effect turning it into the equivalent of an NFT (non-fungible token) seen on other blockchains.

Ordinals now have their own standard known as BRC-20 (Bitcoin Request for Comment) in a nod to the ERC-20 standard on the Ethereum blockchain. And this is the result:

And here is one great use-case for Ordinals.

When Puffin Books announced wholesale changes to Roald Dahl novels, electronic copies were automatically updated even if they were bought before the announcement was made.

Inscribing a novel to a BTC ordinal ensures censorship resistance whilst blockchain technology continues to exist.