This Month in Crypto - February 2023

TMIC # 29 - February, the short month, is over. The optimism of January carried through February with the market bounce sustaining and the very pessimistic sentiment that characterised the second half of 2022 appearing to subside - at least for the moment. In this month's edition: NFT excitement (or disdain) on Bitcoin, Coinbase launches their own Blockchain and, in breaking news, KPMG Australia makes a short trip into 'the Metaverse' + much more.?

Be sure to stick around for the last story, I promise not to disappoint.

NFT's meet Bitcoin

Some controversy stirred throughout Feb as NFT's minted on the Bitcoin blockchain exploded in popularity with approximately 200,000 NFTs being minted on Bitcoin in just a few weeks (here). The breakthrough came in Jan when ex-core Bitcoin contributor, Casey Rodarmor, launched the final piece of the Bitcoin Ordinals project which introduced a way of using metadata on bitcoin to assign a special unique identifier to each individual Satoshi (smallest unit of a bitcoin) on the bitcoin blockchain. Note: one Bitcoin (BTC) can be broken up into 100,000,000 Satoshi's but cannot be fractionalised any further. These uniquely identifiable Satoshis can then store information such as images or audio files - sound familiar? These Satoshis are now Non-fungible - a.k.a. Non-Fungible Tokens ('NFTs'). As the 2020's showed, the Bitcoin community got something of a bad reputation as some of the most prominent 'Bitcoiners' became known for a type of religious puritanism about crypto and Bitcoin which, unsurprisingly, brought strong opposition this month to the launch of NFT's on Bitcoin - many criticising Ordinals for being against Bitcoin's core values. Read more here.

Coinbase new Blockchain

Publicly traded crypto exchange, Coinbase, launched its own blockchain called Base. Base is built using Ethereum layer 2 rollup technology called 'Optimism'. In as few techy-words as possible, this means that Coinbase's new blockchain 'Base' will be using the Ethereum network to bring more of its customers on-chain while also offering them much lower fees to conduct transactions with Coinbase. This is because the layer 2 technology batches up many transactions into one which is then posted to the main Ethereum chain, thereby splitting the transaction fee among each of the individual transactions in the batch. In short: many users transacting = very small transaction fee per user. Importantly, Coinbase stated that they have no intention of issuing a token for Base and the transaction fees for utilising the chain will be in Ethereum's native ETH token - good news for Ethereum as many new users' first blockchain experience will be straight into the Ethereum ecosystem. Read more here.

Google Cloud

Google moved on crypto this month as the Google Cloud business committed to become a validator on the Tezos blockchain network. Tezos is a layer 1 blockchain smart contract platform, similar to Ethereum, vying for developers to build decentralised applications and users to follow. Tezos saw some popularity in 2021 in the heights of the NFT mania which characterised 2020 and 2021. Tezos marketed itself as an 'environmentally friendly blockchain' - whatever that means - and gained some traction as the fees for transacting on Tezos were significantly smaller than Ethereum at the time due to the large demand on the Ethereum main blockchain. Read more here.

CBDC expansion

As the world of CBDC pilots and rollouts continues to trudge ahead, the bank of Russia (central bank) announced plans to pilot its own Central Bank Digital Currency, the digital Ruble, this year. The pilot was put on ice on 2021 after banks in Russia expressed concerns that it would make the banking system more centralised but is now ready to commence in early 2023. It might be easy to imagine why banks and citizens in Russia were skeptical of their government issuing a centrally issued CBDC with concerns over centralisation and control - it's important to keep this in mind when people here in Australia or America also express the same concerns about over centralisation and control that comes with CBDC's as CBDC's are piloted around the world. Read more here.

Breaking news: KPMG meets 'Metaverse'

KPMG Australia entered 'the metaverse' - well, sort of. KPMG Australia's Risk Assurance ('RA') business used the Spatial Platform this month for a full-day 'metaverse' event where different teams within the RA business showcased their various services and client offerings. KPMG Australia employees were able to move around, interact with one another and interact with the 'metaverse' environment.

The following two screenshots give a sneak peak into the experience.

The first, a screenshot shared by KPMG Director, Sarah Overton, shows the space as we saw it from the outside.

The second shows a small section of the space as some users saw it from the inside.

Overall, the sentiment surrounding the experience was fun and, at moments, a good laugh (see above). Some of the glitches and jitters reminded us that technological change is a journey - not a destination - and when it comes to 'the metaverse', I think it's fair to say we're not quite there yet.

Source: me. I was one of those responsible for pulling this event together.

As it turns out, the idea of 'the metaverse' isn't a new one having originated in early 90's science fiction. In concept, 'the metaverse' is something like a digital universal connected layer that sits above our observable reality - kind of like a video game that everyone is connected into. A cool dystopian concept and probably an inevitability, however, despite the many advocates and champions, the 'metaverse' today falls short of the original conception - lacking in universality and user experience. At least for the time being. Reminder: I speak on behalf of myself in all my writings.

Wrapping it up

February was short and sharp and despite the background noise of the ongoing bankruptcy proceedings that hogged quite a bit of TMIC air time over the past 6 or so months, the crypto steam engine continued to roll forward. My personal experience with the Spatial 'metaverse' platform was a bit of a fun and novelty but showed me that much of the hype around 'metaverse' is still a long way from the 90's sci-fi vision. The continued growth of Layer 2's to Ethereum was of most interest to me this month as publicly traded company, Coinbase, committed resources to growing and contributing to the open source Ethereum ecosystem. The Bitcoin NFT battles were, to me, a resurfacing of arguments that have been playing out about what Bitcoin is and how it should be used since its inception. Is it a settlement layer? Is it a money? Is it a currency? Is it a store of value?

Reflecting on the Russia CBDC story, the concerns raised by Russian banks and citizens in 2020 around their central bank's proposed CBDC pilot make sense to us in the context of the current global climate and media surrounding Russia. But I can't help but wonder if many who currently empathise with these concerns won't also be the same people dismissing local critics of CBDC's in our own countries - Australia, America, etc. - of being 'conspiracy theorists' or the popular slur here in Australia, 'cooker'. Time will tell but I sincerely hope we've learned over the past few years to elevate these important discussions and debates beyond the realm of name-calling as CBDC's will no-doubt have huge implications for all of us if the many pilots underway do eventually become reality.

Finally, I hope to never type the word 'metaverse' again but I get the feeling that's wishful thinking.

Until next month,

James