Dispatch #125: Bitcoin NFTs?

In this patch of your weekly Dispatch:

• Ordinal Inscriptions AKA Bitcoin NFTs
• The Fed raises by 0.25%
• Aptos with 0.5M monthly users

The Big Idea

Bitcoin Community in a Tizzy about Native NFTs

A little over a week ago, people started embedding JPEGs in the witness portion of Bitcoin transactions and associating them with specific sats.

☯️ Spam or digital artifacts? That is the question.

To some, these “Ordinal Inscriptions” were quirky, interesting, cool digital artifacts that maybe even improved upon other types of NFTs. To others – including at least one Bitcoin core developer – they were spam, and deserving of censure.

Since then, a debate has raged around:

• whether there is such a thing as legitimate vs. illegitimate uses of Bitcoin;
• around whether certain uses of Bitcoin should be censored;
• whether Bitcoin’s builder culture is too ossified; and
• whether something like ordinals helps address long-term security concerns as miners have to rely more on fees over block rewards.

In many ways, a seemingly simple thing has unlocked some fairly existential debates for the Bitcoin community. Who do they want to be? What do they want to support?

Make Bitcoin Fun Again?

The Latest In…

Macro

Bitcoin and crypto had quite the rally in January. Part of that was likely mean reversion. 😵‍💫

But part of it was also a broader market sense that there was a shift in the air. The first test of that came this week as the Fed held its first FOMC meeting. As expected, the Fed chose to raise rates by 25bps, continuing to slow the pace of rate increases.

More importantly, Fed Chair Jerome Powell acknowledged the progress being made in the fight against inflation, sending stocks higher.

Crypto rally continues or bull trap snaps?

The Latest In…

The Best of the Rest of NFTs

Even beyond Bitcoin’s Ordinal Inscriptions, it was a pretty busy week in NFT land!

• The English Premier League announced a partnership with Sorare.
• Doodles 2 mint sent prices soaring.
• Jim Henson’s iconic “Fraggle Rock” series released an NFT collection.
• Cool Cats rebranded and is looking to expand its IP outside crypto.
• Meta’s Metaverse division lost $13.7B last year. Ouch.

The Latest In…

Nexo Ventures

New year, new investments. While venture capital funds were in a freefall in Q4, the new year has brought new opportunities to make strategic choices. In the latest one from Nexo Ventures, our Web3 investment arm founded in 2022, security holds the reins. We backed crypto security start-up Hypernative in their $9M round.

The firm is focused on creating solutions to protect against zero-day Web3 cyber attacks. Its first product – Pre-Cog, monitors on- and off-chain data sources using ML models to accurately predict threats before they impact. Wishing them luck!

The Week’s Most Interesting Data Story

Aptos at 500,000 Monthly Users

One of the recurring phenomena in crypto is the emergence of new L1s every cycle.

The last cycle saw the rise of Solana.

This cycle, there has been much hype around Aptos - one of the projects that spun out of Facebook/Meta’s Libra/Novi/Diem project.

The question, of course, is how sustainable the initial excitement is. According to numbers shared by the Aptos team itself, the protocol has settled in to a comfortable 500,000 monthly active users.

Not bad for a network that just launched a couple months ago into a deep bear market.

(currency-data: apt button: Buy)

Hot Topics

What the Community Is Discussing

When people say there’s no use for Bitcoin.

From the way back machine.

Narrative Watch: LSD.

What to Watch for Next Week:

• Will the Fed have to tamp down on market enthusiasm?
• Will people still be inscribing?
• Will the Feb 7 SBF hearing produce any fireworks?