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- PayPal holds almost $1 billion in cryptocurrencies
PayPal manages $943 million in cryptocurrencies for its customers, nearly half of which is in bitcoin ($499 million) and a significant portion in ethers ($362 million). The value of deposits has increased by 56% compared to December 31, 2022. This is naturally due to the rise in the cryptocurrency market price since the beginning of the year. As a reminder, PayPal only manages the account maintenance for its customers' crypto investments and outsources the custody of the assets to a third party, presumably Curv, an Israeli digital asset custody startup that PayPal acquired in 2021.
- U.S. Treasury seeks $44 billion from FTX
The Internal Revenue Service (IRS) has filed 45 claims against FTX and its subsidiaries, seeking a total of $44 billion in unpaid taxes and payroll taxes. These claims, classified as "Admin priority", prioritize the IRS over other creditors, including FTX's aggrieved customers. Faced with this situation, FTX's legal team is considering defense options, while the company is already struggling to raise the funds necessary to repay its customers.
- Robinhood records 30% drop in crypto business
In the first quarter, Robinhood suffered a 30% drop in cryptocurrency-related revenue, from $54 million in the last quarter of 2022 to $38 million. However, the company saw an increase of over 36% in its cryptocurrency deposits, reaching nearly $11.5 billion. Despite a decrease in transaction revenue, Robinhood 's total revenue increased by more than 47% to $441 million in the last quarter.
- Stripe continues its Web3 expansion
Stripe, the U.S. leader in payment solutions, has launched a fiat-to-crypto solution to help Web3 businesses offer their customers a simple way to purchase cryptocurrencies. The solution is designed to integrate easily with just a few lines of code and includes anti-fraud tools, such as the Know Your Customer process. In doing so, Stripe hopes to facilitate Web3 adoption among a wider audience. Several companies, including social network Lens, DeFi 1inch protocol and browser Brave, have already adopted the solution.
- Coinbase sees revenue growth in Q1
Coinbase reported a 22 percent increase in quarterly revenue over the previous quarter, from $604.9 million to $736.4 million. However, this represents a 37% decrease from the first quarter of 2022. The company still reduced its net losses to $79 million, down from more than $557 million in the previous quarter. Also note that institutional and retail investors generated $124 billion and $21 billion in volume, respectively. Coinbase CEO Brian Armstrong also explained this week that he sees his dispute with the U.S. Securities and Exchange Commission (SEC) as a way to clarify the industry's regulations. Watch the interview with Brian Armstrong below.
Block 2: Crypto Analysis of the WeekBitcoin has taken the brunt of speculators' infatuation with memecoins, which are community-based cryptocurrencies representing comical memes from the Internet, and it's as weird as expected.
The cryptocurrency world is gripped by a new fad: a novel type of token, called "BRC-20'", which is attracting the attention of crypto-fans and offering a "shitcoining" experience on the Bitcoin blockchain. These BRC-20 tokens are developed using the Ordinals protocol, which has recently gained popularity by allowing the introduction of NFTs on the Bitcoin blockchain. Until now, it was not possible to deploy non-native crypto-currencies - thus fungible tokens, unlike NFTs - according to a Bitcoin-specific standard, unlike Ethereum and its ERC-20 standard. Well, this is now possible.
The BRC-20 standard, which is aptly named after Ethereum's ERC-20 token standard, was introduced in March by a coder known online as Domo. Unlike their ERC-20 cousins, which can be used as collateral in a variety of decentralized applications (Dapps) on Ethereum, BRC-20s are limited to deployment and transfer functions for now.
However, Domo and other experts have issued serious warnings against financial speculation on this new token format. Shortly after the launch of the experimental BRC-20 standard, Domo said, "These tokens will be worthless. Don't waste money creating them en masse."
Despite these warnings, the influx of new BRC-20 memecoins redeemable for real money shows that some are choosing to ignore them. And it's hard to blame them: in the cryptosphere, being first in line for anything new tends to be a good strategy for speculators.
The total market capitalization of BRC-20s has skyrocketed in recent weeks, rising 3441% from $17.5 million on April 25 to $619.7 million on May 9. Several individual BRC-20s have also seen staggering increases during this period.
For example, ORDI, the first and largest BRC-20 with a market capitalization of $236 million, has jumped 2357% in the space of a few days, going from $0.75 to $18.43 at its highest level. Since April 2, ORDI has surged by a staggering 18,000% and is now listed on cryptocurrency exchange platforms such as Gate.io. and Uniswap. Other BRC-20s, such as PEPE, MEME, and MOON, have also generated impressive returns for their holders, all rising more than 2,000% in the past month.
However, the BRC-20 craze has led to significant disruption on Bitcoin transaction fees. BTC fees have reached record levels since April 2021, with average fees per transaction amounting to $31 on May 8.
In one week, Bitcoin generated more than $49 million in transaction fees as the BRC-20 frenzy intensified. Between these fees and block rewards, miners reaped more than $204 million in revenue during that time.
To put this in perspective, this weekly revenue is the highest since May 2022. This high demand for block space has led to significant congestion on the Bitcoin network. The effect was also felt in the centralized cryptocurrency world, with Binance, for example, forced to halt withdrawals twice between May 6 and 7.
So why, as many purists proclaim, would the first assets created via this new BRC-20 technology be "worthless"? The explanation has two parts.
On the one hand, BRC-20 is still only a proposal, and there is no guarantee that it will be widely integrated into blockchain tools like wallets and platforms. Indeed, adoption of this standard could take time: the design of BRC-20 may not be finalized, let alone fully vetted or adopted - watch out for scams! If a competing or improved standard ends up being more widely adopted, the current BRC-20 storm could become a vague memory of speculation.
On the other hand, the current limitations of BRC-20 have a much more immediate downside, even for the most daring speculators who venture into the decentralized Ponzi game of memecoins. The lack of compatibility with decentralized finance (DeFi) means that BRC-20s cannot benefit from the liquidity provided by DeFi services such as exchange pools. Nor can they interact with all existing decentralized applications. In other words, these tokens don't really have a value proposition at the moment.
So even though BRC-20s are a fascinating innovation with great potential, and you're tempted to invest in the most explosive stocks, be aware that you may suffer losses equal to the value of your investment.
Block 3: Gainers & Losers
Cryptocurrencies are evolving at an alarming rate - here's how to master them (The Conversation)
Simon Johnson on stablecoins, artificial intelligence, inequality, etc. (Project Syndicate)
Zuckerberg has led the tech industry into a metaverse desert (Intelligencer)
High Bitcoin fees from BRC-20 and ordinals lead to controversy and challenges (Bitcoin Magazine)
