Today’s edition is brought to you by Spotlight by Vincent – A weekly newsletter that brings you the latest news and insights from the world of alternative assets such as venture, collectibles, real estate, debt, art, NFTs & crypto.
GM. This is Milk Road, where we serve crypto insights on a silver platter, no silverware needed.
Here’s what we got for you today:
- Crypto’s Great Debate 🗣️
- Another player enters the Bitcoin ETF race 🍪
Prices as of 7:30 AM ET. Click here for our Fear & Greed Index
CRYPTO’S GREAT DEBATE 🗣️
There’s a big debate happening in crypto right now…
Are inscriptions good or bad for blockchains?
Inscriptions are data (like text, images, videos, etc.) that are directly inscribed on-chain.
They first became popular on Bitcoin, but are now on a lot of major chains. Ethereum. Solana. Avalanche. Polygon. Arbitrum. You name it.
But like most things…
- Some people love ‘em. - i.e. Bitcoin miners are raking in millions of dollars from inscription fees and some traders are seeing BIG profits.
- Other people hate ‘em. - i.e. a well-known core Bitcoin developer says inscriptions are a vulnerability and wants to block them from Bitcoin.
Inscriptions are the most polarizing debate since… is GIF pronounced with a hard or soft “G”?
(I still have no clue, which is why it’s #3 on my “words to avoid saying in public” list. Next to Herbalife and almond).
Anyways, let’s dive into Crypto’s Great Debate…
THE “INSCRIPTIONS ARE BAD” CASE -
1/ Inscriptions have caused network outages and high transaction fees.
- Arbitrum had a partial outage that lasted 1.5 hours over the weekend. What caused it? A surge in inscriptions.
- The TON blockchain had a partial outage as 2.5M+ transactions were pending last week. What caused it? A surge in inscriptions.
- Avalanche’s transaction fees soared to $400 earlier this week. What caused it? A surge in inscriptions.
- Bitcoin’s transaction fees just hit its highest level since April 2021. What caused it? You guessed it… a surge in inscriptions.
Basically - wherever inscriptions go, they f*ck sh*t up. It either crashes the blockchain or makes transaction fees crazy expensive.
Think of it like crypto’s version of a DDoS attack (aka when attackers spam a website with traffic to take it offline).
This is why one Bitcoin dev is proposing blocking inscriptions from being created and why the U.S. National Vulnerability Database (NVD) even added Bitcoin inscriptions to its list of cybersecurity risks earlier this month.
If Bitcoin inscriptions were a person, they’d be getting the shame fingers…
THE “INSCRIPTIONS ARE GOOD” CASE -
1/ It gives Bitcoin a new use case.
- Bitcoin doesn’t have “smart contracts” (aka the thing that powers stuff like NFTs, decentralized apps, etc.).
- Therefore, Bitcoin doesn’t have NFTs or dApps. No smart contracts = one dumb blockchain.
- But inscriptions changed that by making Bitcoin’s blockchain multidimensional. Now, Bitcoin has its own version of NFTs!
Fun Fact: over the last 24 hours, Bitcoin inscriptions have done $50M in sales volume. To compare, Ethereum has $11M in NFT sales volume and Solana has $8M.
2/ Inscription fees = more money for miners.
The average transaction fee on Bitcoin has jumped from $2 → $37.
For a person using the Bitcoin blockchain… that sucks… a lot. (If I wanted to waste 40 bucks on fees, I’d just use the DoorDash app).
But for Bitcoin miners… it’s amazing. More fees = more profits.
And right now, Bitcoin miners are raking in ~$62M in revenue PER DAY. 🤑
(Holy sh*t, I’m in the wrong business)!
3/ Inscriptions are cheaper to mint than NFTs.
The first two “bull case” points were mainly for Bitcoin. But, what about the other chains?
Ethereum, Solana, and Polygon all have smart contracts. So, why would they have inscriptions too?
The answer: it’s WAY cheaper to mint inscriptions than NFTs.
Here’s a semi-nerdy (but easy-to-understand) explanation:
Side note - although inscriptions have some benefits over NFTs (i.e. inscriptions are cheaper and fully on-chain), they also have some big downsides. You can read more about them here.
Milk Road’s Take: Inscriptions have A LOT of momentum right now…
- They’ve made up ~90% of transactions on many chains this week.
- Sotheby’s (the prestigious auction house) just had its first-ever auction for a Bitcoin Ordinals collection.
- BRC-20 tokens are some of the best-performing cryptocurrencies recently.
…and it doesn’t look like that momentum is slowing down soon.
With that being said, if we’ve learned one thing after seeing Terra, FTX, Celsius, and other “shiny objects” collapse, it’s…
Don’t be blind to counterarguments. The criticism of inscriptions is fair and should be monitored closely.
GET SMARTER ABOUT PRIVATE MARKET INVESTING
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BITE-SIZED COOKIES FOR THE ROAD 🍪
Uniswap–the largest onchain marketplace for digital assets–is now on Android and iOS. It is the easiest way to get into DeFi and swap seamlessly. Download the app today.*
7RCC filed paperwork with the U.S. Securities and Exchange Commission (SEC) to apply for a spot Bitcoin ETF. According to the filings, the fund’s investment strategy is to hold “a combination of bitcoin and financial instruments to gain exposure to Carbon Credit Futures.”
Shiba Inu is planning to launch custom .shib domains. Internet domains 🤝 memecoins.
Google search volume for the term "Solana" has increased 250% from early October to early December. Pop quiz: what’s one of the most underrated metrics to track? Google searches.
A federal judge approved the settlement between Binance and the Commodity Futures Trading Commission (CFTC). Under the settlement, Binance has to pay a $1.35B penalty to the CFTC and Changpeng Zhao (the former Binance CEO) has to pay $150M.
OKX Wallet users need to update their iOS apps to avoid a vulnerability found in a previous version of the app. Using that previous version could “lead to the potential compromise of sensitive data and crypto assets.”
A new Solana memecoin (Dogwifhat) is up 2,000x over the last month. It’s another doggy coin but this time, the dog has a hat. (Dogwifhat. Get it?)
*This is sponsored content
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
