Plus Tether puts up some big numbers
Welcome back. Everyone knows about ChatGPT, but did you know that Sam Altman, the entrepreneur and famed investor behind everyone’s favorite generative AI, also runs a controversial crypto project? Our latest YouTube video covers it all—freaky eye-scanning orbs included.
Today: The TL;DR on BRC-20, Tether opens up, and a curious Celsius development. Let’s go.
Your BRC-20 Questions, Answered
BRC-20 tokens are a bad dream come true for Bitcoin maxis. The controversy around the new token standard peaked last week when it pushed the price of a simple Bitcoin transaction to a two-year high of $30.91.
If you’re curious what all the commotion is about, here are three important questions about BRC-20, answered:
What is BRC-20? BRC-20 is based on Ordinals, the protocol that allows users to inscribe any file directly on Bitcoin—it’s essentially the OG blockchain’s version of Ethereum’s ERC-20 token standard. BRC-20, which was introduced in March by a pseudonymous on-chain analyst known as Domo, allows users to issue and transfer fungible tokens on the Bitcoin network.
Why are Bitcoiners so upset? The BRC-20 token frenzy—and the resulting congestion of the Bitcoin blockchain—is fueled by opportunistic traders capitalizing on the hype around new BRC-20 meme coins (*cough* PEPE).
The token standard also enables Bitcoin-based DeFi, which goes against the vision of many Bitcoin maximalists who argue that the blockchain’s core purpose is to serve as a payments system.
Those maxis have gone as far as proposing the censorship of BRC-20s to keep Bitcoin true to its roots.
Is BRC-20 really the problem here? Taken at face value, BRC-20 trading is responsible for congesting the Bitcoin network and driving up transaction fees. But what it really does is uncover one of Bitcoin’s biggest issues: scalability. If BRC-20 creates so much congestion, what would happen if more everyday people used Bitcoin for more everyday transactions?
Zoom out: Starting with the launch of Ordinals in January, Bitcoin has seen significant activity outside of the original payments use-case envisioned by Satoshi Nakamoto—arguably for the first time ever. The new BRC-20 standard will no doubt play a big role in shaping the narrative around Bitcoin’s purpose moving forward.
Happy Times for Tether
Becoming profitable is notoriously hard for tech companies—and many never do. Not so with Tether Holdings Limited, the company behind USDT (the largest stablecoin by market cap).
In a Q1 assurance report published last Wednesday, Tether laid out just how good business has been lately. The highlights:
Tether reported a net profit of $1.48 billion in Q1, doubling the previous quarter’s results. This suggests Tether has been a big-time winner of rising crypto prices, the banking crisis, and the related depegging of stablecoin competitor USDC.
Tether also recorded an all-time high of $2.44 billion in excess reserves and revealed its BTC and gold holdings. This comes as a response to mounting criticism about the company’s lack of transparency regarding its reserve assets.
Big picture: “Tether has become the most trusted stablecoin in the industry due to its perceived safety from the SEC and due to its peg safety as of late,” Kaiko analyst Conor Ryder told CoinDesk. That gives Hong Kong-based Tether a competitive edge over USDC issuer Circle, whose main selling point was being a U.S.-regulated entity—today, that’s not as attractive as it used to be.
Celsius Meets TradFi
Apollo Global Management, the private equity giant that oversees more than half a trillion dollars of assets, is reportedly participating in a bid to acquire the assets of bankrupt crypto lender Celsius.
Generally, TradFi giants have steered clear of touching any of the stricken crypto firms that went under in 2022’s slew of bankruptcies. But Apollo appears to consider some of Celsius’ operational units a worthwhile investment, despite the crypto lender’s significant baggage.
Looking ahead: Should TradFi really descend upon Celsius, it’s likely that Celsius 2.0 will be a lot more conservative in its business practices than the crypto lender used to be. That means no more ridiculously high yield rates or juggling around of client funds.
In other news:
Binance announced its exit from Canada.
Ethereum experienced two technical hiccups in less than 24 hours and devs are still trying to figure out why.
Do Kwon is set to be released on bail in Montenegro.
Twitter, aka crypto’s town square, is getting a new CEO.
In potentially bad news for creditors, the IRS wants $44 billion from FTX and its affiliated entities.
Crypto Job Board
And that’s what you need on your radar today in crypto. Here’s to a newsletter that only mentioned the SEC once…a rare occurrence these days. Catch you back here next Tuesday!