Anything but the elephant in the room • Letter 130

Top of the new year to you all! In case you forgot, this is Colton from Hedgehog, the app that helps you buy baskets of cryptocurrency and automate your digital asset exposure wherever you custody funds.

I hope you’re getting a good head start on your resolutions. While many of my resolutions involve keeping up my daily streaks for language learning apps, exercise apps, and more, it can also be helpful to have bucket list resolutions like say, making your first crypto investment. If any of your friends are interested and haven’t made the leap into crypto yet, we’d appreciate it if you sent them our way to cross that item off their bucket list.

Frankly, the market is a bit boring this week, as all anyone can talk about is Bitcoin ETF that has been in the news for months, sorta like when Banksy put an elephant in a room full of great art for a cause that otherwise went unappreciated; but we're here to give you the best of the rest:

The IRS wants names

As of January 1, the Biden infrastructure bill may have now made it a felony to receive more than $10,000 of crypto while not reporting the sender’s name, address, and SSN along with the nature of the transaction. Now, technically this only applies to exchanges, brokers, miners, and other people in the business of exchanging digital assets, but we’ve seen other legislation proposed from Warren et al that makes the definition pretty broad.

Now, all of this is subject to legal challenge, but we like to err on the side of caution and just report everything that’s asked of us. We are not Certified Professional Accountants, and you should consult yours before making any choices you might regret.

Inscriptions are forever

In case you missed the drama, some devs found a way to inscribe arbitrary data into Bitcoin blocks and started using it to mint NFTs (“Inscriptions”) directly on the BTC blockchain. This has been widely considered a horrible mistake by many in the community, some going so far as to call it spam, and in fact, Jack Dorsey went so far as to fund a ‘censorship resistant’ mining pool for miners to censor blocks including inscriptions.

That said, Messari reports that BTC NFT volume has just outstripped the combined volume on ETH and SOL, and it doesn’t look like there’s going to be a decline in demand any time soon. I will always cherish my homebrew inscription of my wife and me, and I look forward to other innovative uses of the primitive, like embedding LLM weights into the blockchain.

Pull the lever, Kronk

If you’re wondering why the market lost over 5% of its value recently, people are chalking it up to a combination of BTC ETF FUD (that’s a lot of acronyms) and the concomitant liquidation of a lot of highly levered degens. Of course, the market has already bounced back since Jan 3, but this is a good reminder to stay safu out there friends, leverage can get you into big trouble on the margins.

What are some items on your bucket list? I’d like to build a small nuclear generator at some point.

Keep hedging,
— Colton