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Blockchain and Web3 Weekly Bytes Edition #14
Blockchain & Web3 Weekly Bytes: Insights on Stacks, Coinbase Transactions, and Surging Bitcoin Gains
April 27, 2024
Hello Fellow Enthusiast,
Welcome to this week's edition of Blockchain & Web3 Weekly Bytes. In this issue, I discuss the role of Coinbase transactions in Bitcoin's network and explore how Stacks (STX) is expanding Bitcoin's capabilities with smart contracts and decentralized applications.
Our Chart of the Week showcases significant unrealized gains in Bitcoin following the recent halving event. Additionally, I highlight Stripe's decision to re-engage with cryptocurrency payments and guide you through our weekly video spotlight, providing valuable insights for those looking to forge a career in the blockchain industry.
Thank you for joining me as we traverse these critical updates in the digital assets and blockchain sectors.
Weekly Trivia
Which blockchain became the first to successfully integrate and execute a smart contract?
A) Bitcoin
B) Ethereum
C) EOS
D) Ripple
Find the answer at the bottom of this newsletter.
Tech Spotlight – Coinbase Transaction
A coinbase transaction is the first transaction in a new block on the Bitcoin blockchain. Unlike typical transactions that transfer bitcoins from one person to another, a coinbase transaction awards new bitcoins to miners as a reward for their efforts in securing the network.
How Does It Work?
When miners successfully solve the complex mathematical problem required to add a block to the blockchain, they create a coinbase transaction. This transaction includes the mining reward, which is newly minted bitcoins, plus any transaction fees from other transactions included in the same block.
Why It's Called "Coinbase"
The term "coinbase" shouldn't be confused with the popular cryptocurrency exchange of the same name. In the context of Bitcoin, "coinbase" refers to the source of the new coins in the system, essentially the "base" where new coins are coined.
Real-World Analogy
Think of it like a national mint minting new currency. Just as a mint produces new coins or bills, the Bitcoin network generates new bitcoins through mining, and the Coinbase transaction is the mechanism that distributes these new coins to the miners.
Importance of Coinbase Transactions
Coinbase transactions are crucial for a few reasons:
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Network Incentive: They provide the primary incentive for miners to contribute their computing power to the network, which is vital for the security and continuation of Bitcoin.
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Controlled Supply: These transactions are also the method through which new bitcoins are introduced into the system, adhering to the controlled supply curve outlined in Bitcoin's protocol.
Every Block Tells a Story
Each coinbase transaction is unique because it allows miners to include a small amount of arbitrary data. Miners often use this space to insert messages or bits of culture, such as news headlines or tributes, making each one a small time capsule.
This Week’s Blockchain and Web3 Highlights
Stripe Reintroduces Crypto Payments with USDC: Stripe is set to revive its cryptocurrency payment options, focusing initially on Circle's USDC stablecoin. This move will support transactions on Solana, Ethereum, and Polygon networks, marking Stripe's re-entry into the crypto payment space since pausing its Bitcoin support in 2018 due to high volatility.
Hong Kong Spot Bitcoin and Ethereum ETFs to Begin Trading: On April 30, Hong Kong will start trading its newly approved spot Bitcoin and Ethereum ETFs. This approval from the Securities and Futures Commission marks a significant milestone in the region's cryptocurrency market development.
Franklin Templeton Enhances Tokenized Funds: Franklin Templeton is now facilitating peer-to-peer transfers for its U.S. Government Money Fund, represented by the BENJI token on both the Polygon and Stellar networks. This development positions the fund at the forefront of the tokenized U.S. Treasurie market.
Morgan Stanley to Promote Bitcoin ETFs: Morgan Stanley may soon permit its brokers to recommend Bitcoin ETFs to clients, a significant shift that could inject new capital into the spot ETF markets. This would make Morgan Stanley the first major financial institution to take such a step among its peers.
Jack Dorsey's Block Develops Advanced Bitcoin Mining Chip: Block, co-founded by Jack Dorsey, has successfully developed a three-nanometer Bitcoin mining chip. This innovation aims to enhance the efficiency and effectiveness of Bitcoin mining, with plans to offer a complete mining system eventually.
SEC Delays Decision on Ethereum ETFs: The Securities and Exchange Commission (SEC) has extended its timeline for deciding on spot Ethereum ETF proposals from firms like Franklin Templeton and Grayscale. The new deadline is June 11, 2024, as the community's optimism for approval wanes.
Record Earnings for Bitcoin Miners: Following the recent Bitcoin halving, miners have reported unprecedented earnings, with record revenues stemming largely from transaction fees. This development is likened to Ethereum's DeFi summer of 2020, reflecting a significant revenue shift within the mining industry.
Ledger Partners with MoonPay for Enhanced Services: Ledger Live will soon offer new features, including crypto swaps and instant-buy options, through a partnership with MoonPay. This collaboration is also set to include educational initiatives aimed at crypto traders.
PayPal and EnergyWeb's Green Incentives for Bitcoin Miners: In a new initiative to promote sustainability, PayPal and EnergyWeb have introduced a program that rewards Bitcoin miners for utilizing low-carbon energy sources, aligning mining activities with environmental goals.
Affiliate Spotlight: Trezor Hardware Wallet
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Features of Trezor Wallet
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Robust Security: Trezor uses advanced cryptographic protocols to protect your private keys and prevent unauthorized access.
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User-Friendly: The wallet is easy to use, with a straightforward interface that supports numerous cryptocurrencies for hassle-free management.
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Versatile Compatibility: Trezor is compatible with many cryptocurrencies, suitable for users with diverse portfolios.
Why Choose Trezor?
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Get Your Trezor Today
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Weekly Video Spotlight: Launch Your Blockchain and Web3 Career in 2024 — The Ultimate Guide
Start Your Career in Blockchain and Web3
Are you interested in joining the blockchain and Web3 industry? My video, "Launch Your Blockchain and Web3 Career in 2024—The Ultimate Guide," offers clear guidance for those new to the field or looking to switch careers.
What You'll Learn
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Essential Skills: Identify the core skills needed to excel in the blockchain space.
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Industry Overview: Understand the current state of the industry and the types of opportunities available.
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Practical Steps: Receive straightforward advice on educational paths, gaining experience, and connecting with the community.
To gain the knowledge necessary for starting a career in blockchain and Web3, watch the video here. This guide will provide you with practical information to get started in this burgeoning field.
Chart of the Week: Bitcoin's Unprecedented Unrealized Gains
A key metric has reached a historic high as we pass the 4th Bitcoin halving event. The Market Value to Realized Value (MVRV) ratio, a reliable indicator of Bitcoin's market behavior, currently stands at 2.26, as depicted in this week's chart. This indicates that the average unit of Bitcoin now holds an unrealized profit of +126%.
Understanding the Impact
This metric shows that most Bitcoin investors are currently seeing their holdings increase significantly in value compared to their original purchase price, more so than at any previous halving event. This level of unrealized gain suggests a strong holding pattern among investors who anticipate higher prices ahead.
Why It Matters
The elevated MVRV ratio at this stage suggests a bullish sentiment in the market as investors hold onto their Bitcoin, expecting further gains. This scenario typically indicates a positive outlook on Bitcoin's price potential, influencing short-term traders and long-term investors.
Implications for the Market
If historical trends hold, the substantial unrealized gains might lead to increased market activity post halving. Investors might choose to take profits, causing temporary price fluctuations, or continue to hold, which could tighten supply and potentially drive prices up further.
Source: Glassnode
A Little Blockchain Humor
Source: CoinMarketCap
Thank you for spending time with me in this week's Blockchain & Web3 Weekly Bytes edition. We've covered a range of topics from the critical functions of Coinbase transactions to the innovative applications of Stacks on Bitcoin's network.
Trivia Answer: B) Ethereum. Ethereum was the first blockchain to successfully integrate and execute a smart contract, setting the stage for a wide range of decentralized applications that continue to evolve today.
Please share your thoughts and feedback on this edition here to help me improve and tailor our content to your interests.
Looking forward to bringing you more insights next week!
Warmly,
Ajay Tomar
Disclaimer:
Content in this newsletter is for educational and informational purposes only and is not intended as financial, tax, or legal advice. Always do your research and consult with a professional before making financial decisions. As a solopreneur, I may earn commissions from affiliate links in this newsletter at no extra cost to you. This support helps me bring you valuable content. I only endorse products I trust and believe could benefit you.
Weekly Digital Assets Spotlight
Spotlight on Stacks (STX)
Stacks (STX) aims to bring smart contracts and decentralized applications (dApps) to Bitcoin. This digital asset utilizes a unique consensus mechanism, enabling smart contracts and dApps to benefit from the security and stability of Bitcoin's blockchain.
Features of Stacks
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Smart Contracts on Bitcoin: Stacks introduces a way to execute complex smart contracts on the Bitcoin network, previously limited to simpler transaction types due to its design.
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Clarity Programming Language: Designed for predictability and security, Clarity is a decentralized language Stacks uses to write smart contracts, avoiding common security issues.
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Proof of Transfer (PoX): This consensus mechanism connects Stacks to Bitcoin, allowing STX participants to earn Bitcoin as rewards, reinforcing the bridge between both blockchains.
Benefits of Stacks
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Leveraging Bitcoin's Security: By building on Bitcoin, Stacks benefits from the robustness and security of one of the most tested networks in the blockchain space.
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Innovative Contract Design: Developers can create and deploy contracts directly integrated with Bitcoin's blockchain, opening new possibilities for app development.
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Decentralized Apps: Users and developers can engage with an ecosystem of dApps that utilize the security and capital of Bitcoin, enhancing functionality without compromising on the underlying principles of decentralization.
Why Keep an Eye on Stacks?
Stacks represents a significant step in the evolution of blockchain technology, allowing for more complex functionalities to be built on Bitcoin. This could potentially lead to greater adoption and utility of both Stacks and Bitcoin in various applications, from financial services to supply chain management.
Stacks offers a compelling platform for those interested in the intersection of smart contracts and Bitcoin's established network. Whether you're a developer looking to build secure dApps or an investor seeking assets that contribute to expanding Bitcoin's utility, Stacks presents a valuable opportunity to engage with an innovative blockchain layer.
