Weekly Flip Thru: Bitcoin NFTs Stir Controversy and the Fed Hikes Interest Rates (Again)
How is everyone faring out there in crypto land? In case you’ve been hibernating through the crypto winter, let’s get you up to speed with the latest crypto news. For starters, a bitcoin NFT protocol has popped up and there is some, uh, healthy discussion happening about the idea of bitcoin-native NFTs. Next, the Federal Reserve concluded its first meeting of the year and announced another round of interest rate hikes. And finally, a crypto-powered credit card is coming to Brazil courtesy of Binance and Mastercard.
Continue reading for the top crypto news for the week of February 6, 2023.
Bitcoin NFTs Pop Back Up, Rankling Some Crypto Fans (Decrypt)
Out of the Ordinal? A process called inscription is now adding digital assets, such as embedded images or music, to individual Satoshis on the bitcoin blockchain. A newly launched protocol called Ordinals emerged on the scene last week, and the cryptosphere has had plenty to say about those embedded bits of data that can now tag along with bitcoin transactions.
The common shorthand for these kinds of digital collectibles is non-fungible token, or NFT. As a refresher, a Satoshi is the smallest unit of a whole bitcoin (BTC), which was trading for about $23,000 at the time of writing. Many bitcoin transactions are settled in Satoshis (SATs) rather than the purchaser shelling out an entire bitcoin and expecting change. Because of crypto’s famous volatility, it makes more sense to exchange a few SATs instead of an entire bitcoin. (That is, unless you’re trying to spread awareness of a new customer-centric crypto platform by giving away a whole bitcoin* in exchange for signing up and then using the platform.)
With all that in mind, why might there be uproar when it comes to inscribing an image or two onto Satoshis? Many bitcoin purists don’t fancy the idea of using the bitcoin network to transact digital collectibles. Blockchains like the Ethereum network, Polygon, and Solana debuted later than bitcoin and have carved out a niche among NFT collectors. Yet the technology to include digital assets on a bitcoin transaction’s signature has been around for nearly a decade. Still, some ardent fans of the oldest cryptocurrency are taking the stance that including NFTs in the bitcoin ecosystem represents a needless consumption of data and would drive up network miner fees in the process.
Will bitcoin NFTs finally take hold? The question is still up for debate.
More reading: What Is an NFT?
Fed Hikes Interest Rates by One Quarter Basis Point in First Meeting of 2023 (CNBC)
Could a “soft landing” be in sight? Federal Reserve Chairman Jerome Powell announced another 0.25% interest rate hike on February 1, 2023. This is the eighth consecutive rate hike from the Fed, dating back to March 2022. That’s when the United States’ central bank undertook a strategy of quantitative tightening — making it more expensive to borrow money from banks — to try and slow down economic demand. The tricky task, though, is arriving at a point where inflation cools down to a target range near 2% without pitching the U.S. economy into a full-blown recession. This so-called “soft landing” may be inching closer to reality. Inflation numbers have shown a pattern of reduction since the end of 2022.
In remarks following the Fed’s first meeting of 2023, Powell said, “We can now say I think for the first time that the disinflationary process has started,” but went on to say it would be “very premature to declare victory or to think we really got this.” Further rate hikes are likely for the rest of 2023, in other words.
Binance to Offer Crypto-Backed Credit Cards in Brazil (CoinDesk)
Did you know that nearly half (49%) of Brazilians completed a transaction using crypto in the past year? That remarkable stat, which is above the worldwide average of 41% of people who claimed to have made at least one transaction in crypto last year, comes from a study conducted by Binance and Mastercard. It makes sense, then, that the crypto exchange and payments giant are combining forces to unveil a crypto-backed credit card in Brazil. The prepaid crypto card will support 13 cryptocurrencies, including bitcoin (BTC), ethereum (ETH), and Binance USD (BUSD). The card is expected to be available countrywide throughout Brazil by the end of 2023.
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