🇱🇮 Liechtenstein Wants Bitcoin

Liechtenstein plans to accept BTC for tax and government service payments, meme tokens on Bitcoin keep exploding, and transaction fees rise to two-year highs.

May 12, 2023

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Nation states embracing Bitcoin is moving along nicely. After El Salvador, several Swiss regions, and lately the kingdom of Bhutan, we now have the prime minister of Liechtenstein come forward with a positive stance towards Bitcoin. In other news, the hype around controversial meme tokens on the Bitcoin blockchain is still going strong. This also took network fees to new record highs—with positive as well as negative side effects.

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Quote of the Week:
“What happened with Ordinals and NFTs is we crossed this chasm from what was a bearish scenario to a bullish scenario. If I was a miner I would be ecstatic.”
- Michael Saylor, Executive Chairman of MicroStrategy

🇱🇮 Liechtenstein Plans to Accept Bitcoin for Payments to State

Just last week, we covered Bhutan’s push into Bitcoin mining. Now we have another tiny country delving into Bitcoin. In an interview with German news outlet Handelsblatt, Liechtenstein’s Prime and Finance Minister Daniel Risch announced that his country, with a population of just around 38,000, is planning to add bitcoin as a payment option for government services. “A payment option with bitcoin is coming”, Risch said, without defining a timeframe. There is a minor twist, however: Any payment received in BTC will immediately get exchanged for the national currency Swiss Francs, according to Risch. This would be similar to how Zug and Lugano are handling it in Switzerland, where citizens can also pay taxes and government services with bitcoin. The move is not that surprising, considering how open Liechtenstein has been towards Bitcoin and other cryptocurrencies in the past. In 2019 the country enacted the “Liechtenstein Blockchain Act”, which was one of the first comprehensive regulatory frameworks for cryptocurrencies.

My take: It’s fascinating to see how countries are increasingly embracing Bitcoin. I’m curious who the next El Salvador, Bhutan, and Liechtenstein will be.

💰 Controversial Meme Tokens Reach A Market Value Of Over $900 Million

What started with simple NFTs hosted directly on the Bitcoin blockchain via the Ordinals protocol has now escalated into a meme token frenzy. As we have explained in previous editions of this newsletter, Ordinals allows you to add or ‘inscribe’ any type of data to every Satoshi (the smallest unit) within the Bitcoin database. Now, the hype around BRC-20 tokens has led to an explosion in their market value. The token of the Ordinals protocol called ORDI is currently the most popular asset running on Bitcoin. ORDI reached a fully diluted value of $540 million. Since the beginning of April, the price of the token went up a staggering 22,500% from just $0.11 to around $25. Of course, the price took another violent downturn and currently sits at around $18. Additionally, over 11,000 (!) more assets on the experimental BRC-20 standard have been launched. This recently caused daily Bitcoin transactions to go to an all-time high.

My take: The craze around Ordinals and BRC-20 tokens is, of course, pure speculation, and anyone who wants to save money should consider looking at only Bitcoin. However, rising interest in the Bitcoin network also has its upsides.

🇸🇻 Bitcoin Transaction Fees Rise to Two-Year Highs, And El Salvador Pays the Price

One of the upsides of high Bitcoin transaction fees is that Bitcoin miners earn LOTS of money. Fees are so high at the moment, that they actually surpassed block rewards for the first time since 2017. This can be seen as a bullish signal because as block rewards are getting lower with every halving event, Bitcoin miners will eventually need to sustain themselves from fees only. Here’s Michael Saylor’s take on this: “What happened with Ordinals and NFTs is we crossed this chasm from what was a bearish scenario to a bullish scenario. If I was a miner, I would be ecstatic.” But this is only one side of the coin. The flip side of rising Bitcoin transaction fees is simply that it’s very expensive to send a Bitcoin transaction. The problem was illustrated by Twitter user Marce Romero when she posted: “I’m in El Salvador right now. Just witnessed a cash withdrawal via BTC. This individual now had to pay $20 in fees for getting $100 out in a country where the avg. salary is $300-350. I want you to think about this when enabling gambling on fkn jpegs or meme coins.”

My take: A high-fee environment is a double-edged sword. On the one hand side, it’s good to see that Bitcoin miners can sustain themselves even without the block reward. On the other hand, it’s pricing out people who rely on using the Bitcoin network on a daily basis.

Short news:

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