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19
Dec
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12/19 News Roundup: Bitcoin, Ledger, Richard Heart, Lugano, Fed

Bitcoin transaction fees have risen to tens of dollars. A critical vulnerability related to Ledger was patched in time. Richard Heart is still on the run from Finnish and American authorities. Swiss city Lugano accepts Bitcoin for municipal services and taxes. The Fed finally signals a decrease in interest rates.

Bitcoin transaction fees at highest in 2.5 years

The Bitcoin community has spent the last few months living quietly and enjoying the price increase from the soon-to-be-released spot ETF. However, a lot of uproar has started again among the Bitcoin enthusiasts. The reason is again Ordinals, which hit the headlines for the first time in the spring of 2023.

The Ordinals protocol is an “add-on” to Bitcoin launched earlier this year. You can store NFTs (videos and images) with Ordinals on the Bitcoin blockchain. Ordinals were born as a byproduct of the Taproot update released in 2021, as it freed up the use of Bitcoin block metadata, which was previously limited to a very small number of characters.

Ordinals have divided opinions among Bitcoin maximalists. Certain maxis strongly oppose them, though this group is currently a minority. There has even been a discussion about blocking them with a specific anti-ordinals-update. Arguing over the issue could escalate into a Bitcoin civil war, but that is still a distant scenario.

The highly controversial Bitcoin developer Luke Dashjr has been active in this discussion. He recently posted the following comment on X: “Inscriptions” are exploiting a Vulnerability in #Bitcoin Core to spam the blockchain.” Dashjr calls the Ordinals protocol a vulnerability and an attack on Bitcoin that must be stopped immediately.

Some anti-Ordinals maximalists have recently capitulated. They have admitted that technology cannot be stopped and is not worth fighting against. This is what “Bitcoin OG” Adam Back posted on X:

The Ordinals mania has recently come back to life, just like we saw just over half a year ago. The reason is probably Bitcoin’s two-month-long upward trend. The largest ordinals take the entire Bitcoin block space for themselves, and the transaction fees they pay bring enormous income to miners. The flip side of the coin is that the fees for all Bitcoin transactions skyrocket.

Yesterday, more transaction fees were paid on the Bitcoin blockchain than ever: $23.6 million.

Financial incentives are a significant factor in why the Ordinals-NFT craze will continue. Miners will include ordinals in the blockchain blocks because they make a lot of money from fees. Transaction fees will play an increasingly important role in the Bitcoin ecosystem in the future.

The halving that will take place in the spring of 2024 will drop block rewards to 50 percent lower. The fewer bitcoins miners earn in block rewards, the more income must come from transaction fees to keep mining profitable. More and more miners are coming to the market to compete for the same cake.

Since Bitcoin’s block size is very limited, the only flexible factors are transaction fees or Bitcoin’s price. In recent days, average transaction fees have risen to almost $40. Normally, we are talking about a couple of dollars.

It’s good to understand that Bitcoin transaction fees will rise one way or another in dollars-terms. In the future, tens or a couple of hundred dollar transfers will only be made at Layer 2 levels, as in the lightning network.

P.S. Last week, we also wrote about the Finnish Ordinals project called Artinals. If the topic interests you, read more from this link.

A vulnerability related to Ledger came close to causing massive havoc

The crypto market saw a dramatic day last week, which many investors completely missed. The potentially catastrophic vulnerability was quickly discovered, and the losses were minimal.

The focus of the case revolves around the well-known manufacturer of cold wallets, Ledger. However, let’s make it clear immediately that the Ledger cold wallet does not have and never has had a vulnerability. The drama was about a separate WalletConnect software, which allows the Ledger wallet to be connected to DeFi apps.

It was a very special case where hackers gained access to the computer of a former Ledger employee. For some reason, the person still had the right to make critical program code updates. Hackers updated the WalletConnect software to a new version that emptied the person’s wallet who used it.

Only the funds of someone using Ledger with WalletConnect were at potential risk. Fortunately, what happened was noticed quickly, and the word spread through social media to DeFi users. Otherwise, the consequences could have been catastrophic.

Ledger CEO Pascal Gauthier published his comment about what happened.

According to Gauthier, Ledger’s software updates require the acknowledgment of several people, and the rights of previous employees are removed. “This was an unfortunate isolated incident,” he says.

Although nothing major happened, the ordinary DeFi user should learn from the incident. It’s smart to use multiple wallets and not connect the entire Ethereum portfolio to each DeFi app. Keep most of your investments safe and create a separate portfolio for DeFi use.

Also, see what kind of transaction you are confirming! Don’t just automatically confirm everything that appears on the screen.

Richard Heart is the “Lost Crypto Millionaire”

Richard Schueler is better known in the crypto industry as Richard Heart. The man has been in the headlines in recent years due to his extravagant lifestyle. He has posted pictures of expensive clothes, watches, and jewelry on his social media account. Heart is also the founder of Hex and Pulse Chain cryptocurrencies.

We mentioned Richard Heart about a month ago in our news review. This is because the man’s name came up on the Tax Day of Finland. This is a day where the most-earned persons are listed because the tax records are public. Heart earned more than 15 million euros in capital income in 2022. This made him Finland’s 24th-highest earner!

Since Tax Day, Heart has been in the headlines for other reasons. The SEC, which oversees the US securities market, has sued Heart. The case is about how certain funds were used regarding the Hex and Pulse Chain projects. But the SEC has a problem: it hasn’t been able to reach Richard Heart to bring him to court.

The SEC has formally requested assistance from the Ministry of Justice of Finland to reach Heart. However, it seems that Richard Heart has disappeared underground and left Finland.

The biggest newspaper in Finland, Helsingin Sanomat (HS), published a big story on the subject last week with the title “Missing crypto millionaire.” The newspaper has tried to reach Heart in many different ways, but he has not responded to requests for contact. Below is a picture of the apartment building where Heart rents a place.

HS richard heart

According to HS, Richard Heart is still renting his apartment in Helsinki and has also paid his rent. However, the man hasn’t been seen there for a while. HS speculates that Heart has possibly moved to Estonia, where he owns a company.

Helsingin Sanomat did not get in touch with Heart, and the newspaper did not get any new information about the man’s possible whereabouts. According to HS, Heart had uploaded a video on Instagram of a Rolex watch decorated with diamonds and rubies, which was later deleted.

The “man on the run” is certainly well and kicking, but his whereabouts are still unknown.

Richard Heart is the most famous “Finn” in the crypto industry right now. Of course, he is a citizen of the United States, but according to Helsingin Sanomat, Heart also has a Finnish social security number. His place of residence is also in Helsinki, at least for the time being.

Heart’s chosen tactics are interesting. Many expected him to engage in a fierce public fight against the SEC, but Heart has decided to go underground. It’s hard to see this ending particularly well. How long can a man hide and postpone the inevitable legal battle? We await with great interest how the situation will develop during 2024.

The City of Lugano accepts Bitcoin and Tether for taxes

The city of Lugano in Switzerland is incorporating cryptos into its local financial systems. The city has allowed its residents and businesses to use Bitcoin and Tether to pay taxes and municipal services. This development was officially announced on December 5. It is made possible by an automated process with the help of the Swiss cryptocurrency platform, Bitcoin Suisse.

Lugano has made a decision that allows all local invoices to be paid using Bitcoin, regardless of the type of service or amount. Residents can use the Swiss QR-bill system to make tax and service payments by scanning the code on their invoices and paying through their preferred mobile wallets.

This is a crucial part of Lugano’s Plan B initiative, which collaborates with Tether, aiming to use Bitcoin technology to transform the city’s financial infrastructure. Bitcoin Suisse provides technical support for integrating Bitcoin and Tether as payment options.

This initiative builds upon Lugano’s previous cryptocurrency efforts, such as collaborations with Tether for tax payments since March 2022 and the implementation of blockchain solutions like the MyLugano app, LVGA Points payment token, the Lugano digital franc, and the 3Achain blockchain infrastructure.

Lugano is not the only city in Switzerland that has adopted Bitcoin for payments and is exploring blockchain technology. The Swiss canton of Zug began accepting Bitcoin and Ether for tax payments from companies and individuals in 2021. Zermatt, a municipality in the canton of Valais, also introduced a Bitcoin tax payment option in partnership with Bitcoin Suisse in January 2020.

The Fed’s interest rate hikes are over!

Investors got some long-awaited news from the US Federal Reserve last week. The historic rise in interest rates that started in the spring of 2022 is finally coming to an end.

Investors have been speculating on the Fed’s pivot since the end of 2022. However, the chairman, Jerome Powell, has remained firm in his fight against inflation. Powell continued to raise the key interest rate throughout the beginning of the year and stopped rising it only a few months ago.

This is very important news for cryptocurrencies. The previous bull market in crypto ended in November 2021 when Powell announced that the Fed would start QT operations and interest rate hikes.

FYI: The end of the next bull market will also be decided by Jerome Powell and not by social media influencers who post “Bitcoin to the moon” charts.

The crypto bubble burst at the end of 2021, almost half a year before the first rate hikes were made. This is because the market always anticipates the future. Because of this, cryptos and the stock market have also risen in 2023, even though the Fed has still raised its interest rates.

The market has not believed Powell’s statements about the Fed’s policies and expected the Fed to start lowering interest rates soon. Last week, Powell admitted for the first time that interest rates will be cut in 2024. The Fed’s committee anticipates three rate cuts for the coming year.

With the decrease in the key interest rate, more liquidity will gradually enter the market, creating an environment favoring risky investments. When this includes Bitcoin halving and the first US spot Bitcoin ETF to be published in January, crypto fundamentals look very positive for the coming years.

Other central banks will likely follow in the same direction. The ECB has also stopped interest rate hikes, but the head of the ECB, Christine Lagarde, did not dare to promise a timetable for lowering the key interest rate last week. According to Lagarde, the ECB is “data dependent”. In other words, Lagarde is repeating the same mantra that Jerome Powell has been repeating since 2023.

The background for cutting rates is dropping inflation. Many analysts are already starting to see deflation as a bigger threat. If that were to happen in 2024, we would see a drastic drop in interest rates and money being pumped into the market. This is because deflation is central bankers’ worst nightmare.

If central banks turn on the printers in fear of deflation, it means even better times for crypto investors!

AboutBitcoin Team

Hey! We're the AboutBitcoin squad, a team of crypto lovers who've been all about cryptocurrency since 2017. Every week, we drop the latest news and cool insights from the crypto world. Come hang with us as we dive into the crazy, ever-changing scene of cryptocurrencies – it's gonna be an awesome adventure!