Dispatch #139: Bitcoin: ATH in Usage?

In this patch of your weekly Dispatch:

• BRC-20 on the rise ↗️
• Partisanship ratchets up 💥
• Arbitrum dominates L2s 🏅

The Big Idea

Altcoins on Bitcoin!?

Here at Dispatch, we’ve been following the incredible story of Ordinal inscriptions – a sort of NFT on Bitcoin. Last week in the data story we discussed how Bitcoin had reached a new record number of transactions.

Well it turns out that the primary driver of that activity is people minting and trading BRC-20 tokens. BRC-20 was a primitive token standard proposed by pseudonymous developer Domo a couple months ago. It uses Ordinals to inscribe “token” data to sats which can then be owned, traded, and exchanged like any other token.

What started as an experiment became something entirely different very soon. On May 9, the total market cap of BRC-20 tokens surpassed $1B.

Fees have risen significantly around the BRC-20 interest, and hundreds of thousands of unconfirmed transactions are stuck in the mempool, leading some to argue that this is a poor use of Bitcoin’s resources. Others see it as a case study in how a thriving fee market can keep Bitcoin secure even after the mining subsidy ends.

Right now the debate is healthy, but could it turn into the Blocksize Wars 2.0?

The Latest In…

Does the US Hate Crypto Now?

Boy, has the US turned a corner:

• This week saw a crypto hearing where Congressional Democrats circulated talking points that the crypto industry was not sincerely interested in better regulations.
• As if that weren’t enough, President Biden tweeted that part of the problem with the debt ceiling was Republicans wanting to protect tax loopholes for “rich crypto investors.”
• Bittrex filed for bankruptcy after being targeted by the SEC.
• Of course, the industry isn’t just rolling over. Andreessen Horowitz and Blockchain Association all filed petitions against the SEC’s proposed custody rule, which they argue would be represent a defacto ban on financial advisors interacting with crypto.
• Commenting on this geographical shift, Nexo Prime’s Andrey Stoytchev told Nasdaq:

“Dissecting between Asia and the U.S. is missing the bigger picture, which is that companies in this nascent space and their capital will naturally seek more accommodating jurisdictions with efficient crypto on- and off-ramp infrastructure.”

The Latest In…

2022 Cleanup

It would be so, so nice if just for one week in 2023 we didn’t have to deal with the looming ghosts of last year. Alas that was not this week.

• The Digital Currency Group went into mediation around bankrupt lender Genesis after an agreement that was reached with creditors in February fell apart, calling into question DCG’s ability to pay a half billion payment coming due this month
• Disgraced former FTX CEO Sam Bankman-Fried has requested that a judge throw out 7 of the charges against him, because…reasons?
• Ex 3AC co-founder Su Zhu filed a restraining order against former BitMEX CEO Arthur Hayes.

The Latest In…

Nexo Community

We recently celebrated our 5th anniversary which in crypto feels more like 39 years! What better way to mark this milestone than by a festive AMA session with none other than Nexo's Co-Founder Antoni Trenchev to reflect on the journey thus far?

In the video and this written recap, Antoni discusses how Nexo came to be, the factors that have driven our success and propelled us to a leading position in the industry, and what the future holds for the company. So join us as we take a trip down memory lane and enjoy the ride!

The Week’s Most Interesting Data Story

Arbitrum Appears to be Winning the Layer 2 Wars

Ethereum L2 has been mostly a two-protocol battle for some time, with Optimism in one corner and Arbitrum in the other. This year, Arbitrum became the second of the two to launch a token, which was one of the more energizing events of the recent bull market. While the two grew in lockstep in 2022 in terms of number of daily active addresses, in 2023 Arbitrum has raced ahead. According to Messari, Arbitrum transactions have averaged about 660,000 per day in 2023, more than double Optimism. Can they keep that momentum?

Hot Topics

What the Community Is Discussing

Tether dropped its latest attestation – with Gold and BTC holdings.

Inflation came in lower than expected in the US last month, leading many to speculate the Fed tightening cycle is over.

The debate should stay civil.

What to Watch for Next Week:

• Will BRC-20 tokens be a flash in the pan?
• Will any Democrats break ranks to support crypto?
• Will any fights break out at the Bitcoin conference in Miami?