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Bitcoin Ordinals, the non-fungible tokens minted on the world’s most valuable blockchain, have been the talk of the industry since they emerged virtually overnight earlier this year and quickly rose to prominence. Now they’re providing serious competition to other networks, and changing trading behavior. 

While Ethereum, long the dominant blockchain for NFTs, still ranks number one in terms of trading volume and is unlikely to lose that lead any time soon, Bitcoin has been maintaining a firm grip on second place for more than three weeks.

Besides frustrating rival chains like Solana and Polygon that have been consistently ranking second and third for several months, Bitcoin’s ascendance in the NFT space could have the knock-on effect of spurring a decline in wash trading which can sometimes distort markets.

“Wash trading” generally refers to artificial trading that, rather than representing genuine supply and demand, inflates trading volumes as parties trade between their own wallets. It’s harder to do on the Bitcoin network when it comes to NFT trading.

“You can’t really create tokens and advance smart contracts on Bitcoin, thus making token incentives for trading near impossible and wash trading less likely,” said The Block Director of Research Steven Zheng.

Before exchanges like LooksRare and Blur launched ambitious token-incentive programs designed to steal traders away from top NFT marketplace OpenSea, wash trading was minimal, according to Zheng. Most recently, Blur began awarding tokens to traders based on the total value of the trading they conducted on the marketplace.

Zheng illustrated the power of Blur’s incentives by providing the example of someone trading $1 million worth of NFTs on Blur in the hope of securing more than $1 million worth of BLUR tokens.

“This incentive mechanism doesn’t exist on Bitcoin,” he said. “At least not yet.”

Can Bitcoin Ordinals help restore legitimacy to NFT markets?

At the end of last year, an online sleuth known as @hildobby_ on Twitter posted a Dune analytics dashboard which posited that more than $30 billion of transaction volume, and roughly 44% of all NFT trading, was in fact nothing more than wash trading. At its peak, according to the same dashboard, wash trading accounted for about 80% of the total volume of NFT trades.

Blur’s program, like LooksRare’s before it, led to many traders selling high-valued NFTs from collections like Bored Ape Yacht Club and CryptoPunks in order to collect tokens. During its February peak, Blur’s token hit a price of $1.24 on more than $600 million in trading amid a flurry of transactions on the NFT marketplace.

While trading can cause the NFT market to appear more robust than it actually is  — weekly trading is still down more than more than 90% since the height of 2021’s bull run — many argue it casts a pall over the industry for various reasons.

“Wash trading distorts the NFT market, creating an illusion of demand and value,” web3 advocate @kouk_web3 said in a Twitter thread from March. “It hurts trust, makes real investors vulnerable to losses, and can even lead to regulatory crackdowns.”

In a report published in 2022, leading blockchain analytics firm Chainanalysis agreed.

“NFT wash trading exists in a murky legal area,” it said. “While wash trading is prohibited  in conventional securities and futures, wash trading involving NFTs has yet to be the subject of an enforcement action. However, that could change as regulators shift focus and apply existing anti-fraud authorities to new NFT markets.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Solana Foundation said Tuesday integrated artificial intelligence into the layer one blockchain with a new ChatGPT plugin that’s available for download on Github. 

“This integration from Solana Labs serves as a reference for how AI can make it easier to understand Solana data and protocols, or surface data about Solana’s computing infrastructure and DeFi projects,” the Solana Foundation said in a statement, adding that the plugin can be used to buy NFTs, transfer tokens, inspect transactions, interpret public account data and find NFT collections by floor price.

Solana co-founder and Solana Labs CEO Anatoly Yakovenko said that AI would make the Solana blockchain more usable and understandable.

“Every developer building consumer-oriented apps should be thinking about how their app is going to be interacted with through an AI model because this is a new paradigm for telling computers what to do,” Yakovenko said.

Solana sees surge in activity

Solana has seen a surge in activity this month, as higher fees on Ethereum and Bitcoin have pushed some users to explore alternatives. The network saw the seven-day moving average of new addresses hit 323,000 last week, the highest number since June 2022, according to data from The Block.

More new addresses have already been added so far this month than protocol saw in each of the past six months, the data shows. 

Solana’s native SOL token, which saw dramatic declines last year amid the collapse of the FTX crypto exchange, has staged a recovery since, rising 101% year-to-date. It rose 2.6% on Tuesday to trade at $20.03, according to data from TradingView.

The Solana Foundation, meanwhile, said that it had increased the amount available in a previously announced AI-focused strategic grants program from $1 million to $10 million. The foundation has already received 50 applications, and it is continuing to accept them for new projects.

“The Solana Foundation also kicked-off a 3-month long accelerator program for university students that has a full cohort dedicated to experimenting with blockchain and AI,” it said in the statement.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crusoe is not a pioneer, but a follower, says the lawsuit filed by Stephen Barbour’s mining firm.

This invite-only gathering of 200 people in the Mediterranean marina town of Lustica Bay has been taking place since late March and wraps up this week, featuring official sessions on zero-knowledge cryptography, twice-a-day jumps into the Adriatic Sea and the chance to get face time with Ethereum co-founder Vitalik Buterin.

Cabin just announced plans for the first “network city,” a global alliance of self-governing neighborhoods accessible to “citizens” who hold NFTs.

Despite the market turmoil of the last six months, investment managers say they largely plan to keep putting capital into digital assets, our survey finds.

It’s been a sleepy period for the crypto market, but one player is doing just about as well as it did during the go-go days of the most recent bull cycle. 

Stablecoin issuer Tether saw supply of its flagship dollar-pegged coin reach $83.5 billion on Monday, according to data from The Block. That’s just below the record high of $84.1 billion reached on May 10, 2022.  

Tether’s comeback has occurred against the back drop of a somnolent market that’s under pressure from macro headwinds and regulatory uncertainty in the U.S. Amid declining trading activity and lower crypto prices, the supply of rival USDC has declined from nearly $47 billion to $27.8 billion. 

As for what’s behind USDT’s rise? According to data provider Kaiko, it doesn’t appear to be tied to an increase in trading volumes. 

“The data doesn’t show any notable increase in USDT market share (as measured by trade volume) relative to other stablecoins over the past few months, in large part due to Binance’s promotion of TUSD as an alternative to BUSD,” the firm said. 

The firm added that the increase in USDT supply could be tied to offshore trading among market making firms and whales. 

Here’s Kaiko:

“Why are so many USDT issued on Tron when the network has minimal DeFi activity and several major exchanges such as Coinbase do not support it? Offshore exchanges like Binance and OKX possess the largest USDT balances on Tron, which suggests market makers and whales prefer this network for its low transaction fees.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Elliptic identified crypto wallets, allegedly belong to Chinese companies producing fentanyl precursors, which received more than $27 million in crypto payments.

Elliptic said, a new report, its researchers received offers from dozens of “China-based companies to supply fentanyl precursors” with 90% of those companies saying they accepted cryptocurrency payments.. The companies also said they shipped to Mexico, where most of the fentanyl that flows into the United States comes from, the report also said.

“Most fentanyl trafficked into the United States is manufactured using precursors imported from Chinese suppliers,” the blockchain analytics firm added.

Cryptocurrency being used for purchasing illicit substances and drugs is, of course, nothing new, with the dark-web Silk Road marketplace being perhaps the most well-known example.

Elliptic’s report, published on its website, asserted that the wallets belonging to the Chinese companies producing chemicals required for creating the dangerous narcotic fentanyl “have received thousands of payments,” with the total number increasing “by 450% year-on-year.”

The report also stated that, by Elliptic’s estimations, $27 million worth of precursor would be enough to “produce fentanyl pills with a street value of approximately $54 billion.”

“Seventeen of the businesses even offered to provide fentanyl itself,” the report continued. “Others offered to provide other synthetic opioids even more potent than fentanyl, but that are currently legal to produce and sell in China.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

It’s crypto winter and a time for building, as innovative new open-source projects on Polkadot and Cosmos can attest.

Coinbase has hit back at the U.S. Securities and Exchange Commission in its ongoing lawsuit against the regulator, telling a court that its petition for a response about new digital asset regulation was still warranted.

“The SEC is talking out of both sides of its mouth, and it is wrong at each end,” Coinbase said in a 23-page filing to the Third Circuit of the U.S. Court of Appeals late Monday.

Coinbase filed the lawsuit last month, using what’s called a writ of mandamus that seeks court action against federal officials in “exceptional circumstances.” The action is seeking a specific response from SEC about a previous request for new rules about digital assets. 

At the center of the dispute is the longstanding debate over which which digital assets should be considered security and thereby subject to SEC trading rules. The regulator told the court earlier this month that Coinbase’s most recent legal action was “baseless” and that it still had more time to consider the original request. 

Coinbase says SEC has been clear about its plans

In the latest filing, Coinbase reiterated its argument that the SEC had already made up its mind to deny its request for new rules and pointed to public comments from SEC Chair Gary Gensler.

“The SEC’s and its Chair’s words and actions leave no doubt of the agency’s plans,” Coinbase wrote. “The SEC has no intention of engaging in such a rulemaking in the foreseeable future, and that decision may be unreviewable indefinitely unless the Court grants Coinbase’s mandamus petition.”

Coinbase also argued that the SEC’s enforcement actions demonstrate that it is not considering the petition, and it accused the regulator of ignoring other petitions from the crypto industry for years. 

“The SEC’s threatened enforcement action against Coinbase dispels any doubt,” it said, referring to a recent Wells notice it received that signals a pending investigation. “These actions presuppose that the agency believes the securities laws are clear and workable as applied to digital assets and that additional rulemaking is unnecessary.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.