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To steel man the case a little: The pro Ordinals and inscriptions case could broadly be understood as: “Come for the fun, rich art, stay for the decentralized digital money.” You could also agree with some of the critiques of shitcoin NFTs, and see this as a way of arguing that “Bitcoin does it better” e.g., Bitcoin inscriptions are immutable, always on chain, simpler and more secure than shitcoin NFTs. But even if they (ordinals) are not a short-lived fad, what’s the most likely outcome here? Low-value inscriptions will likely be priced out by financial transactions over time as Bitcoin gets adopted by more people. Over the medium to long terms, financial transactions will come to dominate in Bitcoin. Other uses of Bitcoin will be subordinate to its use as decentralized money for the internet.

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Bitcoin is becoming especially popular in countries like Nigeria and Kenya while African refugees are also turning to bitcoin when other cross-border tools fall short. Operations like Bitcoin DADA in Kenya and Bitcoin Mountain in Cameroon both of which started and ramped up their operations in 2022, show that the rampant growth of bitcoin adoption in Africa will be driven by grassroots initiatives, regardless of global bear market blues.

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A filing added recently reveals additional details on DCG’s plan to sell Genesis as a part of the latter’s bankruptcy proceedings. The plan entails the Digital Currency Group turning over its Genesis Global Trading equity to the bankrupt Genesis Global Holdco in an effort to sell both companies. The company entered into restructuring in late November, after reportedly failing to secure $1 billion in rescue funds. Rumors of an imminent bankruptcy resurfaced at the beginning of 2023, and a chapter 11 filing was revealed on January 20th, days after the firm reduced its headcount by 30%.

The SEC’s enforcement staff issued a letter to Paxos known as a Wells notice, which the agency uses to inform companies and individuals of a possible enforcement action, according to the people. The notice alleges that Binance USD, a digital asset that Paxos issues and lists, is an unregistered security, according to the people. It couldn’t be determined if the SEC notice is specifically related to Paxos’ issuing of the coin, the listing of the coin or both. Firms that receive Wells notices are allowed to respond in writing and tell the SEC why it shouldn’t proceed with a lawsuit. Wells notices aren’t a final indication that the SEC will take enforcement action. The agency’s five commissioners must vote to authorize any enforcement settlement or litigation.

Kraken, the San Francisco based exchange, inked a ground-shaking settlement with the SEC on Thursday, with Kraken agreeing to shutter its U.S. staking services and pay a $30 million fine amid agency accusations that the services amounted to a sale of securities. That enforcement action likely marks a beginning of similar cases putting big exchanges in the spotlight. Insiders, experts and the rhetoric of officials suggest a reckoning with the government is inevitable for the big exchanges, and this week’s action against Kraken could be just the beginning.

Even though PayPal was allegedly planning to launch its stablecoin in mere weeks, a report from Friday revealed the firm decided to temporarily suspend the project. The decision is largely based on Thursday’s news that PayPal’s main partner in the effort, Paxos, is under investigation by the New York State Department of Financial Services.

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The facility, which opens this year, will possess 30,000 crypto mining machines, hire 100 workers and consume 100 megawatts from the power grid. The mining center will enjoy a broad set of incentives, from zero land and property taxes to a lowered income tax rate. The electricity prices will be cut by half for the mining operator.

"Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin," the IMF said in a statement. The IMF's so-called "article IV" visit has been sharply critical in the past. El Salvador's move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.

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Bitcoin changes our mental model and we can see it in a lot of people that get into Bitcoin. Many Bitcoiners start saving and not living paycheck to paycheck. Many start taking their lives more seriously and quit drinking alcohol and playing video games. Still others start investigating their diet and quit eating sugar, carbs, seed oils and other things they've been eating their whole lives. Some even get married and start having children. There are even some who start taking religion seriously. These results are pretty puzzling. What does a digital money have to do with any of these things?

LocalBitcoins has announced that the exchange will be closed for service by the end of February. The long-time Bitcoin trading service was the first peer-to-peer (P2P) transaction platform for many Bitcoiners. Launched in June 2012, the exchange is one of the oldest entities in Bitcoin, establishing itself as a primary P2P player in its hey-day with over $100 million in weekly trading volume of peer-to-peer transactions.Notably, the shutdown has arrived just as P2P Bitcoin merchants and individual sellers have come under heavy scrutiny from U.S. regulatory authorities.

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lnurl-auth is very unique in the sense that it doesn’t even need a Lightning wallet to work, it is a standalone authentication protocol that can work anywhere. The basic idea is that each wallet has a seed, which is a random value (you may think of the BIP39 seed words, for example). Usually from that seed different keys are derived, each of these yielding a Bitcoin address, and also from that same seed may come the keys used to generate and manage Lightning channels. What lnurl-auth does is to generate a new key from that seed, and from that a new key for each service (identified by its domain) you try to authenticate with.

Regulators are effectively picking winners — with larger, more established crypto firms able to hang on to their bank relationships, while newer ones are shut out. Meanwhile, other jurisdictions are making a bid for their business. Hong Kong has adopted a friendlier tone once again, as has the UK. The UAE and the Saudis are looking to attract crypto firms. And US regulators can scarcely afford to forget what happened with FTX, in which they curtailed the business activities of onshore exchanges, effectively pushing US individuals into the waiting claws of SBF. If bank regulators continue their pressure campaign, they risk not only losing control of the crypto industry, but ironically increasing risk, by pushing activity to less sophisticated jurisdictions, less able to manage genuine risks that may emerge.

The inflated bitcoin prices may not reflect a heightened demand for the asset (bitcoin) but a continued demand for the U.S. dollar as the country’s local currency suffers. Nigeria’s bitcoin premiums are not a new phenomenon and they typically reveal the discrepancies between official and unofficial U.S. dollar exchange rates in the country. Although the government sets the official rate, thanks to the country’s chronic currency devaluation problem, the dollar sells for much higher on unofficial local forex markets.

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It is reasonable to presume that in a situation where the bitcoin price continues its rally through 2023, capital will quickly flow to Bitcoin miners, thereby lifting hash rate and reducing miner unit revenue (a commonly-preferred metric for understanding unit revenue is “hash price”). The questions for miners is how likely such a BTC rally is and how long will it take for sufficient capital expenditures to be deployed, such that hash price reverts to its equilibrium. Many public miners are now more than 90% below their peaks and trade at valuations that attribute very little intrinsic value to their businesses. However, they remain highly volatile and have close correlations with the price of bitcoin.

This week’s newsletter summarizes a discussion about storing data in transaction witnesses and references a conversation about mitigating LN jamming. Also included are our regular sections with the summary of a Bitcoin Core PR Review Club meeting and descriptions of notable changes to popular Bitcoin infrastructure software. On the issue of storing data in transaction witnesses, Andrew Poelstra emphasizes that there is no effective way to prevent data storage. Adding new restrictions to prevent unwanted data storage in witnesses would undermine advantages discussed during taproot’s design and would likely only result in the data being stored in other ways. Those other ways might raise costs for those generating the data—but probably not by enough to significantly discourage the behavior—and the alternative storage methods might create new problems for traditional Bitcoin users.

India wants to launch its central bank digital currency at a national level by the end of 2023, but early into its pilot, the Reserve Bank of India has identified challenges, several people familiar with the matter said. The CBDC-R is meant for the private sector and Indian citizens. The wholesale CBDCs are restricted to financial institutions and are meant to improve the efficiency of interbank payments. Publicly, the RBI has said the CBDC will provide an additional option to the currently available forms of money that is easier, faster and cheaper to use than existing payment rails, along with the transactional benefits of other forms of digital money. Privately, as an emerging economy, one of the world’s largest populations in 2023, and the fifth largest in terms of GDP, India’s geopolitical motivation is to counter the dollarization of the global economy.

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Governor Andrew Bailey and Chancellor Jeremy Hunt revealed a roadmap on Monday night for creating a new central bank digital currency (CBDC) – dubbed “Britcoin” in the press – that could enter circulation by the end of this decade. It is understood that Britons will initially be limited to transferring a few thousand “digital pounds” into their accounts under plans being drawn up. The limit will be imposed in order to prevent “large and rapid outflows” from traditional high street banks.“A limit on individuals’ holdings would apply at least in the introductory phase,” the Treasury said. “This would strike a balance between both encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds. These limits could be amended in the future.”