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Come with me to the land of saffron and rosewater for a story lost in the annals of history. This ancient kingdom, rich in history and once the mightiest empire in the world, is a forgotten desert in the eyes of much of the West. Yet those who choose to ignore the Persian empire seem to have forgotten their role in shaping its modern history. Much like the women of Iran removing their hijabs today, let us remove the veil of ignorance that has clouded this murky history and explore a chapter of its history that set the course for the world we know today.

The Persian empire has had dynasties come and go. In 1794, Agha Mohammad Khan Qajar, set out to reunify Persia after years of political instability. Despite his heavy-handed approach, he was successful in his mission, but was assassinated three years later. While the beginnings of the Qajar reign showed a future to be hopeful for, each subsequent Qajar ruler became weaker than the last.

In the grand tapestry of the Qajar era, a child of royal lineage and privilege was born: Mohammad Mossadegh. This illustrious lineage saw him journey to Paris to study finance and later he received doctoral honors in law in Switzerland. By the year 1918, the starboy began to shimmer like a desert mirage: unmasking an embezzlement scheme hidden in the finance ministry’s shadowy corners and daring to impose a fine on his own mother, a Qajar princess, for delayed taxes. Yet, beneath these deeds pulsated a fervor greater than integrity or a son of the Constitutional Revolution — it was a yearning to liberate his beloved Persia from the shackles of foreign influence.

The Qajar dynasty bore the marks of falterings and appeasements etched into its historical tapestry: The infamous Russo-Persian Wars saw Persia give up the Caucasian territories to the Russian empire. There was one agreement between the British and Persians, a pact so egregious that it echoes with the mournful sighs of future generations. In 1901, Mozaffar ad-Din Shah Qajar, desperate for some financial respite, inked what came to be known as the D’Arcy Concession with British entrepreneur William Knox D’Arcy. D’Arcy was granted exclusive rights to prospect for oil across vast swaths of Persian territory, covering three-quarters of the nation, for a lengthy term of 60 years. In return for handing over such immense potential wealth, Persia received a mere £20,000 (£2.1 million in today’s money) in cash, another £20,000 in shares, and a promise of just 16% of the annual profits.

From the ashes of 1905 to the bloom of 1911, a revolution stirred the Persian spirit. A storm of discontent brewed under the oppressive mantle of the Qajar Dynasty, economic turmoil and the looming specter of foreign powers. A symphony of diverse voices — ordinary citizens, merchants, clerics — began to harmonize into a resilient resistance, demanding a charter to rein in the power of the throne. The air thickened with political tumult, resonating with the clash of armed struggle, until the dawn of the Persian Constitution of 1906 broke over the horizon. This sacred document emerged as the symbol of a reformed nation, taming the shah’s unbridled power, welcoming the birth of the Majles — a bicameral parliament — and steering the vessel of the state towards the beacon of modernity.

The D’Arcy Concession was forever shadowed by controversy and resentment. As the Persian Empire entrusted its subterranean wealth to foreign hands, murmurs of dissent began to permeate the nation. The threads of dissatisfaction, silently woven into the fabric of society, were given a voice with the failed Anglo-Persian Agreement of 1919. A proposed remedy, it instead served as the spark that set the stage for a grand upheaval. Sensing his nation’s waning influence, British General Edmund Ironside tapped the leader of Persia’s elite Cossack Brigade to seize this moment as his own. Reza Khan claimed more and more power until finally grasping the role of prime minister. Then in 1925, Reza Khan succeeded in convincing the Majles to remove the Qajar dynasty and name him the Shah. Thus was born the Pahlavi dynasty. Yet there was one member of the Majles who voiced his opposition to such a drastic change: A starboy who wanted to honor the 1906 Constitution, but was outnumbered and succumbed to an early retirement when his virtue was not matched by his colleagues in the Majles.

The Shah was not like his father, Reza Khan — a dictator with an iron fist. The Shah was 22 when he came to the throne. In the first Majles election under his reign, he failed miserably at attempting to rig the elections. The backlash was catastrophic, prompting the Tehran Spring. This moment in Iranian political history saw a unification of voices that echoed the 1906 revolution: It did not matter if they sat on the left, right, communist, or religious extremist — everyone was united against the Shah. Much like how Deioces, the first king to unite the Assyrians, vanished until he was coaxed back to rule over this new land, Mohammad Mosaddeq was coaxed out of retirement to help forge a new path for his country. His return marked a new direction for Iran’s political narrative, marrying the ideals of democracy and nationalism in a harmonious embrace. In his own timeless words from 1944, he declared, “No nation gets anywhere under the shadow of dictatorship”. And with this credo etched in his heart, he stepped into the limelight once more, poised to change the course of Iran’s history.

Reza Shah ushered in a new era for Persia. So new that he asked all foreign countries to cease calling his home by the name assigned to it by Greece, but invited the world to call his home Iran (Land of the Aryans). Where the Qajar Shahs were lions in name but lambs in deed, Reza Shah was a lion in every sense of the word. Reza Shah set out to remind Iranians of the richness of their history and culture, he even mandated the religious conservatives to remove their hijabs as Iran was older than Islam so why should Islam influence his esteemed country. And yet, in the gulf city of Abadan, the Anglo-Persian Oil Company (aptly renamed Anglo-Iranian Oil Company, AIOC) was establishing a British community in this ancient land. The AIOC had built every imaginable need for their crown jewel of an oil company, but at the cost of alienating the desert tribes and traditional communities. Water fountains adorned with signs that read “Not for Iranians” were the oil that fueled the growth of Iranian resentment toward their British occupiers.

Mosaddeq’s logic of democracy and nationalism went hand-in-hand: how could a country be a democracy if it did not have genuine control over its own affairs? For this era of Iranian history, Iran’s most important resource was its oil. But post-war Britain was not going to release its grip on its crown jewel. The British proposed the “Supplemental Agreement”, but they miscalculated. They envisioned Iran to be similar to when Reza Shah ruled, an Iran where free speech and thought was out of the question. In 1933, Reza Shah negotiated a new deal with the APOC, but the largest concession he received was the change in name to AIOC. But under this new Majles, championed by Mosaddeq, Iranians were quick to question any government dealings that would succumb to foreign influence. The request from the Iranians was rather mundane: They merely wanted to audit the claims of the British that the AIOC was not profitable. In reality, the AIOC was funding their post-war welfare programs in Britain. Interestingly, it was these same British architects of control who, in the confines of their own island, chose to nationalize their resources, thereby fortifying their postwar welfare state. The hypocrisy was stark and inescapable: While they championed national rights on their own soil, they vehemently opposed a similar path for Iran, a country burdened by the concessions it had made to them. Postwar strains left Britain financially vulnerable, compelling them to resist further negotiations with the Iranians. Meanwhile, across the Atlantic, the Americans had forged a 50/50 agreement between ARAMCO and Saudi Arabia, a contrasting model of resource sharing. Yet, despite the shifting sands of international precedent, the Majles in Iran remained cautious, viewing the notion of nationalization as too drastic a measure for the moment.

By the dawn of the 1950s, the voices of the Persian people echoed through the labyrinthine streets of Tehran, their passionate chants carrying the united demand to nationalize the AIOC. The public had grown weary of foreign dominion over their resources and yearned to reclaim control over their rich, oil-laden lands. Even when the olive branch of a 50/50 agreement was proffered, it was met with resounding resistance, the wound of previous injustices still fresh in the national psyche. The Shah stood on shaky ground. His authority, once unassailable, had been eroded by the rising tide of public discontent, marking a sharp fall from grace. One poignant illustration of this erosion was the Shah’s conspicuous absence at the Norooz (Iranian New Year) celebrations, an event traditionally marked by the royal presence. For the first time in many years, the square that usually hummed with anticipation for the royal arrival, lay eerily silent, a tangible sign that the Shah’s influence and public support were waning.

As winter thawed into spring in 1951, a unanimous wave of agreement swept through the Majles on March 15. This defining moment led to a political fallout — the Prime Minister, Hossein Ala, felt the chill of exclusion as he was bypassed in the strategic decision-making of the nine-step plan to nationalize the AIOC, triggering his abrupt resignation. In the ensuing vacuum of power, the Shah’s nominee, Zia ed-Din Tabatabai, was presented to the Majles, only to be met with a firm rejection. The Majles flexed its democratic muscles and cast its vote overwhelmingly in favor of Mohammad Mosaddeq, 79 to 12, pushing him onto center stage. Backed into a corner, the Shah was left with no alternative but to reluctantly bestow the mantle of Prime Minister onto Mosaddeq, his most detested adversary. Instead of looking to the elder Mosaddeq as an advisor — he was 69 when elected prime minister — the Shah feared Mosaddeq until his death. Consequently, the British found their worst Iranian nemesis at the helm of Persian politics, a fact that would send ripples through the fabric of the Empire.

In the searing summer of 1951, Mosaddeq, often compared to the venerable ancients Cyrus and Darius, came forth as the liberator of his people. Wielding power like a finely balanced sword, Mosaddeq echoed the pacifist resolve of Gandhi and the rebellious spirit of Hugo Chávez. His ascendancy was a bitter pill for the British to swallow, who watched helplessly as their worst Iranian nemesis enacted a sweeping expropriation of the AIOC, or as he provocatively called it, “the former company”.

His audacious move gave birth to an economic deadlock that felt like a protracted game of chicken, with the U.S. blinking first under the stern gaze of Mosaddeq and the increasingly vocal Iranians. Truman, fearing the simmering rise of communism in a strife-ridden Iran, urged negotiation, effectively validating the nationalization of the AIOC. The British, however, responded with an air of imperial disdain, and even their veiled threats of a militaristic Plan Y were quelled by U.S. intelligence reporting on Mosaddeq’s near-unanimous support among his people.

Unyielding negotiations and the adamant British refusal to recognize the principle of nationalization led to severe sanctions on Iran, precipitating its decline into an economic abyss. In the face of this international embargo, a weakened Iran faced the British at the UN, with Mosaddeq eloquently defending his nation’s aspirations. His triumph was so profound that the Security Council was left with no choice but to defer the debate, sparing the British further humiliation.

Even after this monumental victory, the principle of nationalization remained a sore point in the negotiations. Despite Mosaddeq’s openness to resuming discussions, the newly empowered Conservative Party under Churchill remained obstinate. Mossadeq, ever the statesman, recognized that this wasn’t just about oil or economic deals, but a struggle for the very soul of a nation.

Amid this high-stakes drama, the global stage cast its spotlight on Mosaddeq, making him Time’s “Man of the Year” for 1951 Yet the British, undeterred, continued to undermine him, even as the Iranian people rallied around their leader, ready to defend their rights and their resources to the end. In their hearts, they knew that this fight for their homeland, for their very identity, was indeed their finest hour.

In the swirling chaos of Iranian politics, not all were in alignment with Mossadeq. As the quality of life deteriorated, resentments bubbled to the surface, and fingers were pointed at Mossadeq, seeing in him a puppet of the West. The communists, in particular, held him in their crosshairs.

The British did their best to subvert Mosaddeq, even going as far as instigating riots during the next Majles election. A request for military control from the Shah by Mossadeq further stoked the flames of discord, but was met with refusal. Mossadeq, in an act of protest, submitted his resignation, only to be reinstated after his successor’s tenure crumbled in just five days. Fearful whispers spread that Mossadeq aspired to the presidency or perhaps the throne, but the principled leader maintained his stance; a monarch should reign, and a prime minister should rule.

Enter Fazlollah Zahedi, a loyal servant of the Pahlavi dynasty, an officer dismissed by Mossadeq for an overly violent crackdown of protestors, but with deep ties to anti-communism. In his quest to dislodge Mossadeq, Zahedi skillfully played the game of allegiance, managing to turn some of Mossadeq’s closest allies against him. The key figure that Zahedi would manipulate was Ayatollah Abol Qasem Kashani who had supported Mosaddeq’s nationalization plan, but was wavering over fear of growing Western influence in Iran. Meanwhile, Mossadeq, feeling the pressure, severed diplomatic ties with Britain, ordering the closure of their embassy and the expulsion of all British officials.

During this diplomatic tussle, Dwight D. Eisenhower was elected President of the United States, promising to take a hard line against communism. Seizing this moment, Britain presented Operation Boot to the U.S., hinting at the communist threat from Iran. British intelligence painted a grim picture of Mossadeq’s Iran — a nation on the brink of chaos, a fertile ground for Soviet influence.

Skepticism met these initial reports in Washington, with the local CIA station chief warning of an Anglo-colonial scent to the scheme. Yet, the relentless anti-communist fervor of Allen Dulles, the new director of CIA, prevailed. Despite a thorough analysis suggesting that Mossadeq was not a communist, and that his nationalization agenda enjoyed almost universal Iranian support, the Eisenhower administration green-lit Operation Boot.

A torrent of propaganda was unleashed against Mossadeq, depicting him as everything from a communist sympathizer to an atheist. CIA operatives infiltrated various layers of Iranian society, hiring the Rashidian brothers and sowing the seeds of dissent, pushing important figures into active opposition against the government. Meanwhile, Mossadeq remained blissfully ignorant of this covert assault, clinging to his faith in American goodwill. He wrote to President Eisenhower asking for a loan or the right to sell Iranian oil to the U.S. By the time Mosaddeq received his rejection letter from President Eisenhower, a quiet American was on his way to Tehran.

The stage was set for the CIA’s covert coup, dubbed Operation Ajax, with Kermit Roosevelt Jr. at the helm. In a four-pronged attack aimed at destabilizing Mossadeq’s rule, the plan involved a vigorous propaganda campaign, inciting riots and disturbances, securing the cooperation of military officers, and finally, facilitating the Shah to dismiss Mossadeq and appoint Zahedi as his replacement. The final point was the most challenging, but after receiving assurances that he would be out of Tehran and granted asylum should the coup fail, the Shah signed two farmans (imperial decrees), one dismissing Mosaddeq and one naming General Zahedi as Prime Minister.

However, the coup met with initial failure. Mossadeq’s chief of staff had been tipped off, and the Shah, fearing for his life, fled to Iraq. Yet, the relentless Roosevelt, undeterred by this setback, orchestrated a masterstroke of misinformation. Mass-produced copies of the Shah’s signed farmans were spread across Tehran, turning public sentiment against Mossadeq. Despite the story of the failed attempt on his life that Mosaddeq shared on the radio, the Iranian people began to question their Prime Minister and wondered if he in fact was the one orchestrating a coup.

In the final act of this grand political theater, paid mobs of Iranian wrestlers paraded the streets of Tehran, first as communists supporting Mossadeq, and later as nationalists defending the Shah. This culminated in violent clashes at Mossadeq’s home on August 19, 1953, resulting in 300 deaths and the successful execution of the coup. Many of the dead “patriots” had 500-rial notes in their pockets; the price of their loyalty, handed out by the CIA.

The aftermath was a mixed bag. Britain, the initial instigator, was humbled in the international arena, and the only five-years-old CIA catapulted into stardom with its first win and a playbook they would reuse for decades to come. In the world of petropolitics, it was the United States that had the last laugh. A new deal saw control of Iranian oil divided between Britain and a consortium of American companies, with billions of dollars flowing into American coffers over the next 25 years. Iran would also reap the rewards of this tidal wave, but it was never the same.

Such is the tumultuous tale of power and intrigue that unfolded between Iran, Britain, and the United States. The Shah, restored to his throne, ruled with an iron fist backed by American support. The brief flicker of democracy in Iran was smothered under his monarchy, paving the way for the Islamic Revolution of 1979, which still shapes the region’s geopolitical landscape today.

Eisenhower’s administration, triumphant, set the stage for Operation Ajax to be a play used and reused for foreign policy. The CIA now had the success to point to when engaging in foreign policy around the world: A tactic that would be repeated in many corners of the world with varying degrees of success and often regrettable consequences.

Once the unrivaled guardians of Iran’s oil bounty, the British were compelled to divide the spoils with their transatlantic allies. The concession was not just a sharing of material wealth, but also a surrender of prestige, a palpable testament to their receding clout in a world increasingly tipped in America’s favor. As a desperate attempt to retain a semblance of their former power, they rebranded the Anglo-Iranian Oil Company as British Petroleum. They remained in the game, their chess pieces still in play but demoted from kings and queens to mere pawns. Their dominance had been replaced by a subtle servitude, their power once absolute, now shared.

Mossadeq, the once-celebrated leader of Iran, was left a fallen hero. Accused of treason, he was sentenced to three years in prison and lifelong house arrest. He refused the Shah’s pardon, holding steadfast to his belief in Iranian sovereignty until his last breath.

Meanwhile, the innocent people of Iran, who had once held hope for a future shaped by their own hands, found themselves caught in a storm of international power politics. Their aspirations for democracy were doused by the ambitions of world powers, their rich, ancient land reduced to a mere battleground of Cold War rivalries.

And thus, the chapters of history unfolded, a saga of imperial ambitions, covert operations, and the struggle for sovereignty. The story of the 1953 coup is etched in the annals of global politics, a poignant reminder of the consequences when the games of power override the principles of justice, self-determination, and respect for national sovereignty.

Editor’s Note: All facts were taken from the book America and Iran: A History, 1720 to the Present by John Ghazvinian from pages 1-206.

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These days we often wax eloquent about the “early days of Bitcoin” and the great visionaries who participated in the discussions on protocol development. However we often forget that the cypherpunks of olde were human too — that early oversights & unresolved disagreements resulted in cumbersome idiosyncrasies that define our sacred blockchain today.

If you weren’t around in 2009 and want to get a taste of what it was like back then, come join the discussion in Ordinals land. We’re speedrunning Bitcoin Consensus.

What is the debate about?

Ordinal Theory describes how to serialize & track satoshis. These satoshis, when serialized, are called “ordinals”. We can associate chunks of data that we call “inscriptions” to these ordinals, thus creating a form of NFT on Bitcoin. It’s a simple concept, but the implementation of the client that runs ordinals is quite complex. Ordinals began as a passion project but exploded into popularity in a matter of a few weeks. Because of the rise in hype and complexity of the client, a lot of “bugs” in the client implementation were discovered. Due to the arcane nature of how the implementation actually works, a lot of these bugs & idiosyncrasies became the subject of market speculation.

The most notable of these idiosyncrasies has arguably become a feature, not a bug. On the OG Ordinals explorer site, ordinals.com, Inscriptions were displayed with a number whenever they were “inscribed”. These numbers were a fun and easy way to track how many Inscriptions there were and immediately became a focus for collectors.

A few weeks ago, the creator of Ordinals published a blog post about how these Inscription numbers have created undesirable consequences and how maintaining these numbers hamstrings further protocol development. Recently, I tweeted my opinion on the matter and it kicked off the first major debate in Ordinals land.

Narrowly, this is a discussion over maintaining or changing the current numbering of Inscriptions. More broadly, this is one of the first real community discussions over how protocol decisions are made. Broader still, this is a question of “what is the protocol, how do we define an ‘Inscription’”.

Important Clarifications

• Ordinal — a serialized satoshi
• Ordinal number — the number given to an ordinal
• Inscription ID — the ID given to an Inscription, derived from the transaction it’s created in
• Inscription number — the number given to an Inscription based upon its order of recognizance by the ord client ← this is what the debate is over
• This is a rapidly developing topic. I don’t address the refactor inscription parsing or sequence numbering PRs in this piece.

How did we get here?

On January 20, 2023, Casey Rodarmor announced that his ord client was “ready for mainnet”. Casey had been incubating Ordinal Theory for years and workshopping the client with friends. Ord also enabled inscribing, identifying, and reading Inscriptions. Casey & the gang would spend their time casually coding and discussing Bitcoin heresies such as “art on other blockchains is actually kind of cool”.

When Ordinals & Inscriptions went viral in early February, this once personal project spawned an entire vibrant ecosystem overnight. As hype grew we saw the genesis of 2 narratives: a tale of the Code and a tale of the Culture. At times they are interlinked but they could also be entirely distinct, much like a lot of Bitcoin today.

The Code

The ord client existed entirely on Casey’s personal github repo throughout the past spring. Hundreds of issues piled up as the entire NFT userbase piled into a handful of discord servers. Casey’s code and Bitcoin itself were stress tested.

A couple weeks into the frenzy, it became clear that some inscriptions weren’t being recognized by ord. These inscriptions mostly had to do with edge cases in either how Bitcoin works and how the ord client parsed through inscriptions. That led to some “missed inscriptions” that went into Bitcoin blocks but weren’t displayed on the ordinals.com frontend, therefore they didn’t receive an Inscription number. It wasn’t very clear how many were missing or what we even thought about those inscriptions… …were they actually “inscriptions”? This topic was discussed very little because there was a new kind of Bitcoin culture forming, one that brought with it a cacophony that drowned out much further technical discussion. For the time being, most of the rules of the protocol had to be intuited from how ord worked.

The Culture

The entirety of interest in Ordinals came from outside Bitcoin — from NFT collectors & degenerates alike. These are largely nontechnical folks, but also highly motivated to jump through whatever hoops needed in order to buy a jpeg (syncing a full Bitcoin node, running ord in command line). These newly christened bitcoiners immediately began collecting, trading and speculating on the hot new digital assets.

As Inscription activity heated up, ordinals.com quickly ticked towards Inscription #10,000. An iconic Twitter spaces bore witness to crossing the historic number — that same twitter spaces evolved into the de facto Schelling Point for Ordinals culture & events: The Ordinals Show. Casey was inundated with requests for interviews while the legacy Bitcoin community criticized & clutched their pearls at this new beast, slouching towards Bitcoin. It was an incredibly overwhelming period — the best of times and the cursed of times.

The topic of missing inscriptions was brought up in a couple confused github issues and discord threads. In mid-February the subject of these missing inscriptions came up on a podcast Casey was on. He put the issue up for vote to the hosts who voted to keep the Inscription numbering as-is, and then Casey tweeted this out:

The Curse

So what should we do about these missing inscriptions? Some projects began intentionally producing these “missing” inscriptions and created a sense of urgency to resolve the issue. In April, Casey put out PR #2307, coining the term “Cursed” for these missing inscriptions. The PR proposed giving these cursed Inscriptions negative numbers, with the plan to at some undefined point in the future “bless” the inscriptions by recognizing them in the ord client. They would then receive numbers whenever they were recognized.

Diving a little deeper, there are multiple ways an Inscription can not be recognized & parsed by ord. Raph describes 4 types of Curses:

The 4 Curses (so far)

• More than 1 inscription in a transaction
• ord only recognizes inscriptions in the first (reveal) input, so inscriptions in other inputs are cursed
• If there are uneven tags (most popularly OP_66, but can be any OP_evennumber) within an inscription envelope the client considers the inscription unbound to a specific satoshi
• More than 1 inscription on a sat (now called “reinscription)

While these are the 4 types of clearly identified curses, we do not know what other curses may be discovered in the future. Perhaps these 4 are all that will ever exist (I doubt it), but this is an unknown unknown. Each of these existing & future curses would require community coordination to “bless” and such coordination is hard, often controversial. To commit to an unknown amount of future coordination events is generally bad protocol design especially when it could all be addressed today by not committing to preserving inscription #s.

It is worth noting that during the writing of this article we have discovered a new kind of cursed inscription, emphasizing the point I make above.

Some of us at the time, myself included, tried to bring up our concerns with the approach to maintaining Inscription numbering and the challenges it could introduce to future development. Ordinally, a key developer on the project, encouraged consensus on Inscription ID and leave numbering to the market:

The Consensus

Consensus in Ordinals has pretty much respected Casey’s hegemony & unilateral decision making. The personal repo era, migration to a github org, promoting Raph to lead maintainer, the various PRs & updates — all of these have been celebrated & embraced by most. Updates have been pushed with little community input and scrutiny but have largely been deemed desirable. We even changed numbers before with no community pushback when an inscription was created but not associated with a sat (“unbound”) resulting in an off-by-one error in inscription numbering. A major reason why there has been little community input is because very few people actually understand how the client works under the hood.

Today there are various forks of ord which power the ecosystem: marketplaces, wallets, aggregators, etc. These forks are updated with each iteration to the reference client. Each client generally seeks to maintain parity with ord. We at OrdinalHub have opted not to fork but instead rebuild the entire client in Golang and call it “gord”. Going through this development process has given us an intimate understanding of how the ord client works and the challenges in addressing current & future edge cases.

The Community however is largely unaware of work on github and the technical state of indexing. Very few users seem to understand how their Inscription gets identified & presented on a marketplace or in their wallet. Because of this, the Inscription number is their identity because it is their primary reference point to the asset & ecosystem.

The Case

To summarize my case: I wish to convince the “Cultural Layer” that it is not worth it to the long term success of ordinals to design the protocol around maintaining inscription numbering. I recognize that these numbers are special & cherished, but I think it’s more important to prioritize the long term sustainability of ordinals. If we continue to try to preserve legacy numbering going forwards it complicates protocol development and reduces its likelihood of survival.

Casey recently changed his mind about renumbering and laid out the reasons Cursed Inscriptions make development problematic in his blog:

The logic required to identify & track these cursed inscription types requires custom hard coding of each type and later reordering them back into the series. The process of “blessing” the inscriptions creates more surface area for community debate & potential governance disagreements. It also requires more coordination among ord forks & indexers, in many cases they would have to implement their own custom logic as well. From a technical standpoint, this would result in unintuitive ordering when there exists an extremely intuitive ordering: Block Height & txindex within the block.

Since we do not know the future types of curses that may be discovered, committing to keeping the Inscription numbers potentially brings more scenarios where we have to create weird technical solutions & require social coordination to solve a problem that does not have to exist.

Thinking long term — my personal opinion is that the primary use-case of Inscriptions will not be JPEGS & collectibles, but rather things that take advantage of Bitcoin’s data layer: rollups, state updates, data preservation & documentation, etc. In such a case we should be designing the protocol not for collectibles but for diverse functionality. Our descendants will look back on us and wonder what we were thinking adding this unnecessary complexity (and then they’ll just go back to Timechain sequencing).

All this said, I think there are very promising compromises & middle-ground solutions which reduce historical numbering changes while providing a less-encumbered way forwards. I hope to support some of these options as they develop.

The Collections

The most painful friction is with collectors & collections. The outcry against renumbering has produced “Love Letter[s] to Inscription numbers”, polls, and s to numbering. Many times, those of us most concerned with technical implementation discount the importance of the cultural layer. The Sub1k twitter makes a strong appeal:

Initial estimation suggests renumbering would have minimal change to earlier inscription numbers, but I don’t think that’s a very strong point as the outcry is against any change. I do think there are ways to accommodate for a change in numbering for many collections, by honoring “legacy” numbering or by expanding the collections (is it wrong to have ~100,092 in sub100k?). Sadly, there isn’t a solution for having a specific number like a birthday or a lucky number.

I also love the numbers and I want to keep numbering inscriptions. I just hope to convince you that going forwards it is not worth it to the longevity of the protocol to commit to keeping numbers stable. As I mentioned before, there are compromise proposals out there that preserve historical numbering while reducing emphasis on stable numbering going forwards. I think those may be reasonable solutions.

Metaprotocols

One criticism about changing Inscription numbering is its effect on metaprotocols utilizing inscription ordering. Regardless of my personal criticisms on design or feasibility of these metaprotocols — should a nascent, pre-1.0 protocol like ord, make poor design decisions in order to prevent confusion for metaprotocols built on top of it? I emphatically say no.

That said, I think there are an abundance of solutions these metaprotocols have at their disposal. In the case of BRC-20 the ability to rebuild current token balance state would be broken — “cursed” BRC-20 deploy/mint/transfer functions would distort entire token balances. However this can be addressed by coordinating block heights to update inscription recognizance to parity with ord, “freeze” with a version of ord, and/or “snapshot” balance state. Domo, the creator of BRC-20, has proposed similar ideas.

The same techniques could be utilized by all other metaprotocols such as Bitmap, Satsnames, etc. Some have pushed back on these ideas saying that “coordination is quite difficult”. To that I say no shit, that is why we can’t commit to it at the base protocol level.

Going forwards

This is really a discussion on protocol definition and governance.

Comparatively, this is the most careful & thought out proposal to ord since its initial release in January. This is the first blog post Casey has written in a year and the most public discussion he has participated in since February. While it may seem that decisions are rapid & sweeping, this is by far the most we as a community have discussed any changes to the ord reference implementation.

It’s an open source protocol so the community is free to fork from ord parity. You can choose not to update or implement a client you disagree with. However this is the absolute worst outcome and I would rather do nothing than have a significant community fork and I doubt ord would make a decision that creates such a split.

There have been various proposals for an Ordinals Improvement Process (”OIPS”). It’s clear the community wants to discuss governance now and I welcome this conversation.

As for definitions & documentation, my view is that we should have consensus around the following: core parts of Ordinal Theory (sat origination, tracking, & inscription association), inscription IDs, and valid ord envelope definition. From there we can discuss how the protocol might evolve and how the reference client may be built. Personally, I believe that a “valid ord envelope” should be as permissive as possible.

Overall, I think the community has handled this pretty well. There have been some unnecessary spats but it’s quite minimal compared to the scorched earth at the height of the Blocksize War. Ordinal Theory is Casey’s love letter to Bitcoin. He & those close to the project have devoted a significant amount of their lives to this idea and we all wish to carry on in this happy shared delusion. I am confident there are productive paths forward.

I would write way more on this, but this piece is already way over my word limit so I’ll see you on Twitter.

This is a guest post by Charlie Spears. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Today, the Great North Air Ambulance Service (GNAAS), a vital air ambulance charity serving the North East, North Yorkshire, Cumbria, and the Isle of Man, has teamed up with CoinCorner, a leading Bitcoin and Lightning service provider, to accept Bitcoin donations on their website.

“We’re delighted to be working with the Great North Air Ambulance Service as they embrace Bitcoin,” said Danny Scott, CEO at CoinCorner. “A growing number of charities are realising the benefits of accepting bitcoin – from opening up to a world of borderless donations, to reducing the time and costs associated with traditional payment methods – this innovative and forward-thinking approach is changing the future of payments.”

The partnership with CoinCorner represents a significant step forward for GNAAS, as they become one of the first air ambulance services in the UK to accept Bitcoin donations. This innovative approach aims to leverage the benefits of Bitcoin, providing supporters with an alternative method to contribute to their life-saving mission.

Ashleigh Chapman, Head of Income and Engagement at GNAAS, shared her enthusiasm for the new initiative, stating, “At the Great North Air Ambulance Service, we strive for innovation in fundraising and want to make it as accessible as possible to donate to our life-saving cause. Bitcoin is an important element of today’s economy, and we hope that accepting donations will enable us to reach a wider range of supporters, increasing our income and allowing us to continue our vital work.”

Supporters of the Great North Air Ambulance Service who wish to contribute through Bitcoin can do so effortlessly by utilizing CoinCorner’s Bitcoin payment gateway to make secure and convenient donations. To make a Bitcoin donation to the Great North Air Ambulance Service, visit their dedicated donation page on their website here.

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This is an opinion editorial by Aleksandar Svetski, founder of The Bitcoin Times and The Amber App and author of “The UnCommunist Manifesto,” “Authentic Intelligence” and the upcoming “Bushido Of Bitcoin.”

The world is changing before our very eyes. Artificial intelligence (AI) is a paradigm-shifting technological breakthrough, but probably not for the reasons you might think or imagine.

You’ve probably heard something along the lines of, “Artificial general intelligence (AGI) is around the corner,” or, “Now that language is solved, the next step is conscious AI.”

Well… I’m here to tell you that those concepts are both red herrings. They are either the naive delusions of technologists who believe God is in the circuits, or the deliberate incitement of fear and hysteria by more malevolent people with ulterior motives.

I do not think AGI is a threat or that we have an “AI safety problem,” or that we’re around the corner from some singularity with machines.

But…

I do believe this technological paradigm shift poses a significant threat to humanity — which is in fact, about the only thing I can somewhat agree on with the mainstream — but for completely different reasons.

To learn what they are, let’s first try to understand what’s really happening here.

Introducing… The Stochastic Parrot!

Technology is an amplifier. It makes the good better, and the bad worse.

Just as a hammer is technology that can be used to build a house or beat someone over the head, computers can be used to document ideas that change the world, or they can be used to operate central bank digital currencies (CDBCs) that enslave you into crazy, communist cat ladies working at the European Central Bank.

The same goes for AI. It is a tool. It is a technology. It is not a new lifeform, despite what the lonely nerds who are calling for progress to shut down so desperately want to believe.

What makes generative AI so interesting is not that it is sentient, but that it’s the first time in our history that we are “speaking” or communicating with something other than a human being, in a coherent fashion. The closest we’ve been to that before this point has been with… parrots.

Yes: parrots!

You can train a parrot to kind of talk and talk back, and you can kind of understand it, but because we know it’s not really a human and doesn’t really understand anything, we’re not so impressed.

But generative AI… well, that’s a different story. We’ve been acquainted with it for six months now (in the mainstream) and we have no real idea how it works under the hood. We type some words, and it responds like that annoying, politically-correct, midwit nerd who you know from class… or your average Netflix show.

In fact, you’ve probably even spoken with someone like this during support calls to Booking.com, or any other service in which you’ve had to dial in or web chat. As such, you’re immediately shocked by the responses.

“Holy shit,” you tell yourself. “This thing speaks like a real person!”

The English is immaculate. No spelling mistakes. Sentences make sense. It is not only grammatically accurate, but semantically so, too.

Holy shit! It must be alive!

Little do you realize that you are speaking to a highly-sophisticated, stochastic parrot. As it turns out, language is a little more rules-based than what we all thought, and probability engines can actually do an excellent job of emulating intelligence through the frame or conduit of language.

The law of large numbers strikes again, and math achieves another victory!

But… what does this mean? What the hell is my point?

That this is not useful? That it’s proof it’s not a path to AGI?

Not necessarily, on both counts.

There is lots of utility in such a tool. In fact, the greatest utility probably lies in its application as “MOT,” or “Midwit Obsolescence Technology.” Woke journalists and the countless “content creators” who have for years been talking a lot but saying nothing, are now like dinosaurs watching the comet incinerate everything around them. It’s a beautiful thing. Life wins again.

Of course, these tools are also great for ideating, coding faster, doing some high-level learning, etc.

But from an AGI and consciousness standpoint, who knows? There mayyyyyyyyyyy be a pathway there, but my spidey sense tells me we’re way off, so I’m not holding my breath. I think consciousness is so much more complex, and to think we’ve conjured it up with probability machines is some strange blend of ignorant, arrogant, naive and… well… empty.

So, what the hell is my problem and what’s the risk?

Enter The Age Of The LUI

Remember what I said about tools.

Computers are arguably the most powerful tool mankind has built. And computers have gone through the following evolution:

1. Punch cards
2. Command line
3. Graphical user interface, i.e., point and click
4. Mobile, i.e., thumbs and tapping

And now, we’re moving into the age of the LUI, or “Language User Interface.”

This is the big paradigm shift. It’s not AGI, but LUI. Moving forward, every app we interact with will have a conversational interface, and we will no longer be limited by the bandwidth of how fast our fingers can tap on keys or screens.

Speaking “language” is orders of magnitude faster than typing and tapping. Thinking is probably another level higher, but I’m not putting any electrodes into my head anytime soon. In fact, LUIs probably obsolete the need for Neuralink-type tech because the risks associated with implanting chips into your brain will outweigh any marginal benefit over just speaking.

In any case, this decade we will go from tapping on graphical user interfaces, to talking to our apps.

And therein lies the danger.

In the same way Google today determines what we see in searches, and Twitter, Facebook, Tik Tok and Instagram all “feed us” through their feeds; generative AI will tomorrow determine the answers to every question we have.

The screen not only becomes the lens through which you ingest everything about the world. The screen becomes your model of the world.

Mark Bisone wrote a fantastic article about this recently, which I urge you to read:

“The problem of ‘screens’ is actually a very old one. In many ways it goes back to Plato’s cave, and perhaps is so deeply embedded in the human condition that it precedes written languages. That’s because when we talk about a screen, we’re really talking about the transmission of an illusory model in an editorialized form.

“The trick works like this: You are presented with the image of a thing (and these days, with the sound of it), which its presenter either explicitly tells you or strongly implies is a window to the Real. The shadow and the form are the same, in other words, and the former is to be trusted as much as any fragment of reality that you can directly observe with your sensory organs.”

And, for those thinking that “this won’t happen for a while,” well here are the bumbling fools making a good attempt at it.

The ‘Great Homogenization’

Imagine every question you ask, every image you request, every video you conjure up, every bit of data you seek, being returned in such a way that is deemed “safe,” “responsible” or “acceptable” by some faceless “safety police.”

Imagine every bit of information you consume has been transformed into some lukewarm, middle version of the truth, that every opinion you ask for is not really an opinion or a viewpoint, but some inoffensive, apologetic response that doesn’t actually tell you anything (this is the benign, annoying version) or worse, is some ideology wrapped in a response so that everything you know becomes some variation of what the manufacturers of said “safe AI” want you to think and know.

Imagine you had modern Disney characters, like those clowns from “The Eternals” movie, as your ever-present intellectual assistants. It would make you “dumb squared.”

“The UnCommunist Manifesto” outlined the utopian communist dream as the grand homogenization of man:

If only everyone were a series of numbers on a spreadsheet, or automatons with the same opinion, it would be so much easier to have paradise on earth. You could ration out just enough for everyone, and then we’d be all equally miserable proletariats.

This is like George Orwell’s thought police crossed with “Inception,” because every question you had would be perfectly captured and monitored, and every response from the AI could incept an ideology in your mind. In fact, when you think about it, that’s what information does. It plants seeds in your mind.

This is why you need a diverse set of ideas in the minds of men! You want a flourishing rainforest in your mind, not some mono-crop field of wheat, with deteriorated soil, that is susceptible to weather and insects, and completely dependent on Monsanto (or Open AI or Pfizer) for its survival. You want your mind to flourish and for that you need idea-versity.

This was the promise of the internet. A place where anyone can say anything. The internet has been a force for good, but it is under attack. Whether that’s been the de-anonymization of social profiles like those on Twitter and Facebook, and the creeping KYC across all sorts of online platforms, through to the algorithmic vomit that is spewed forth from the platforms themselves. We tasted that in all its glory from 2020. And it seems to be only getting worse.

The push by WEF-like organizations to institute KYC for online identities, and tie it to a CBDC and your iris is one alternative, but it’s a bit overt and explicit. After the pushback on medical experimentation of late, such a move may be harder to pull off. An easier move could be to allow LUIs to take over (as they will, because they’re a superior user experience) and in the meantime create an “AI safety council” that will institute “safety” filters on all major large language models (LLMs).

Don’t believe me? Our G7 overlords are discussing it already.

Today, the web is still made up of webpages, and if you’re curious enough, you can find the deep, dark corners and crevices of dissidence. You can still surf the web. Mostly. But when everything becomes accessible only through these models, you’re not surfing anything anymore. You’re simply being given a synthesis of a response that has been run through all the necessary filters and censors.

There will probably be a sprinkle of truth somewhere in there, but it will be wrapped up in so much “safety” that 99.9% of people won’t hear or know of it. The truth will become that which the model says it is.

I’m not sure what happens to much of the internet when discoverability of information fundamentally transforms. I can imagine that, as most applications transition to some form of language interface, it’s going to be very hard to find things that the “portal” you’re using doesn’t deem safe or approved.

One could, of course, make the argument that in the same way you need the tenacity and curiosity to find the dissident crevices on the web, you’ll need to learn to prompt and hack your way into better answers on these platforms.

And that may be true, but it seems to me that for each time you find something “unsafe,” the route shall be patched or blocked.

You could then argue that “this could backfire on them, by diminishing the utility of the tool.”

And once again, I would probably agree. In a free market, such stupidity would make way for better tools.

But of course, the free market is becoming a thing of the past. What we are seeing with these hysterical attempts to push for “safety” is that they are either knowingly or unknowingly paving the way for squashing possible alternatives.

In creating “safety” committees that “regulate” these platforms (read: regulate speech), new models that are not run through such “safety or toxicity filters” will not be available for consumer usage, or they may be made illegal, or hard to discover. How many people still use Tor? Or DuckDuckGo?

And if you think this isn’t happening, here’s some information on the current toxicity filters that most LLMs already plug into. It’s only a matter of time before such filters become like KYC mandates on financial applications. A new compliance appendage, strapped onto language models like tits on a bull.

Whatever the counter-argument to this homogenization attempt, both actually support my point that we need to build alternatives, and we need to begin that process now.

For those who still tend to believe that AGI is around the corner and that LLMs are a significant step in that direction, by all means, you’re free to believe what you want, but that doesn’t negate the point of this essay.

If language is the new “screen” and all the language we see or hear must be run through approved filters, the information we consume, the way we learn, the very thoughts we have, will all be narrowed into a very small Overton window.

I think that’s a massive risk for humanity.

We’ve become dumb enough with social media algorithms serving us what the platforms think we should know. And when they wanted to turn on the hysteria, it was easy. Language user interfaces are social media times 100.

Imagine what they can do with that, the next time a so-called “crisis” hits?

It won’t be pretty.

The marketplace of ideas is necessary to a healthy and functional society. That’s what I want.

Their narrowing of thought won’t work long term, because it’s anti-life. In the end, it will fail, just like every other attempt to bottle up truth and ignore it. But each attempt comes with unnecessary damage, pain, loss and catastrophe. That’s what I am trying to avoid and help ring the bell for.

What To Do About All This?

If we’re not proactive here, this whole AI revolution could become the “great homogenization.” To avoid that, we have to do two main things:

1. Push back against the “AI safety” narratives: These might look like safety committees on the surface, but when you dig a little deeper, you realize they are speech and thought regulators.
2. Build alternatives, now: Build many and open source them. The sooner we do this, and the sooner they can run more locally, the better chance we have to avoid a world in which everything trends toward homogenization.

If we do this, we can have a world with real diversity — not the woke kind of bullshit. I mean diversity of thought, diversity of ideas, diversity of viewpoints and a true marketplace of ideas.

An idea-versity. What the original promise of the internet was. And not bound by the low bandwidth of typing and tapping. Couple that with Bitcoin, the internet of money, and you have the ingredients for a bright new future.

This is what the team and I are doing at Laier Two Labs. We’re building smaller, narrow models that people can use as substitutes to these large language models.

We are going to open source all our models, and in time, aim to have them be compact enough to run locally on your own machines, while retaining a degree of depth, character and unique bias for use when and where you need it most.

We will announce our first model in the coming weeks. The goal is to make it the go-to model for a topic and industry I hold very dear to my heart: Bitcoin. I also believe it’s here that we must start to build a suite of alternative AI models and tools.

I will unveil it on the next blog. Until then.

This is a guest post by Aleksandar Svetski, founder of The Bitcoin Times and The Amber App, author of “The UnCommunist Manifesto,” “Authentic Intelligence” and the up-coming “Bushido Of Bitcoin.” Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Airdrops have emerged as a powerful tool for token distribution, user acquisition and community building as the blockchain industry has grown. They provide a unique opportunity for projects to distinguish themselves, incentivize desired behaviors and foster long-term relationships with their user base. But the question remains: Do airdrops work?

Based on my prior research in the Journal of Corporate Finance, the answer — at least according to the data so far — is “yes.” But my new research with Kristof Lommers and Lieven Verboven highlights that their efficacy hinges on thoughtful design, clear objectives and strategic execution.

At the heart of a successful airdrop lies the careful selection of eligibility criteria and incentives. These criteria can range from simple (like owning a specific token) to more complex (like exhibiting certain behaviors on-chain), but they should be aligned with the airdrop’s objectives. For instance, if the goal is to reward loyal users, then the eligibility criteria could include users who have held a certain token for a specific period. Similarly, if the aim is to promote a new protocol, then the criteria could be interacting with it.

​​Related: Should Bored Ape buyers be legally entitled to refunds?

Incentives, on the other hand, can take various forms — from direct token rewards to exclusive access to new features or services. The key is to strike a balance between being attractive enough to engage users and remaining economically viable for the project. For example, the Blur airdrop integrated social media activity into its eligibility criteria. Instead of just providing tokens to existing users or holders of a certain token, Blur incentivized users to share the airdrop on social media platforms and encouraged referrals among their networks to gain extra tokens. This method not only broadened the reach of its airdrop but also fostered a sense of community as users actively participated in spreading the word about Blur.

Timing also plays a crucial role. Launching an airdrop too early in a project’s lifecycle might lead to token distribution among users who lack genuine interest, while a late-stage airdrop might fail to generate the desired buzz. The optimal timing often coincides with a project’s token launch, creating initial distribution and liquidity. As prior research by Yukun Liu and Aleh Tsyvinski highlighted, momentum in the market plays a big role in explaining token prices.

However, airdrops are not without their challenges. One of the most serious risks is Sybil attacks, where malicious actors create multiple identities to claim a disproportionate share of tokens. Mitigating this risk requires a blend of strategies, including upfront whitelisting of users, raising barriers to entry and implementing Sybil attack detection mechanisms.

Especially in the past two years, projects must take into account the regulatory environment. Although nonfungible tokens (NFTs) have been largely exempt from strict regulatory enforcement action by the Securities and Exchange Commission, fungible tokens have been more in their line of sight, and the distribution of tokens coupled with an expectation of future profit could increase legal risk. Given the regulatory gray zone around tokens, projects must ensure they’re not inadvertently issuing securities. And with most large blockchain networks being public, privacy concerns may arise, potentially revealing sensitive information about airdrop recipients.

So, how much of a token supply should be allocated to an airdrop? There’s no one-size-fits-all answer. A project’s unique goals and strategies should guide this decision. However, research indicates that teams allocate 7.5% of their token supply to community airdrops on average.

One of the often-overlooked aspects of airdrops is their potential to harness the power of network effects. By incentivizing sharing, airdrops can amplify their impact, attracting more users to a project’s ecosystem and creating a self-reinforcing cycle of growth and value creation.

Related: There’s a simple formula for adding crypto to your portfolio

A final consideration to keep in mind is the simplicity of the airdrop. Convoluted eligibility criteria will confuse people — even if it is intelligently and rationally designed. An airdrop should be a straightforward and enjoyable experience for users, particularly for non-crypto natives. Collaborating with wallet providers can simplify the process for such users, making the airdrop more accessible and attractive.

A good analogy is in the context of monetary policy. When the United States Federal Reserve articulates simple policy rules about how it will deal with inflation, and then sticks to them, markets react much more positively than when it deviates from rules. The same is true with airdrops: Design them carefully, but keep them simple and transparent.

Airdrops can indeed work wonders when designed and executed well. They offer an exciting avenue for projects to stand out in the crowded blockchain landscape, encouraging user engagement and community development.

But their success is not a matter of chance — it’s a product of thoughtful design, clear objectives and strategic execution. Especially as many potential airdrops loom on the horizon with Sei Network, Sui, Aptos and more, understanding and harnessing the power of airdrops will become increasingly crucial for projects aiming to thrive in this dynamic space.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Peter Schiff, best-selling author and chief economist of Europac, has warned about the coming of a new great depression period in America. In an interview, Schiff stated that official Consumer Price Index (CPI) numbers were designed to mislead the public and that the country was going to face a depression worse than the one it faced back in the 1930s.

Peter Schiff Warns of Great Depression With Prices Rising

Peter Schiff, economist and best-selling author, has warned about an upcoming economic crisis that will unleash a new Great Depression far worse than the one the U.S. faced back during the 30s. In an interview, Schiff commented that this crisis will be in part originated by the high inflation levels that the government is fueling by increasing public spending, which will affect the qualification of the U.S. public debt.

Schiff stated:

We’re going to have a crisis because we do raise the debt ceiling. Because we’ve continued to raise that debt ceiling instead of dealing with the real problem, which is not the ceiling, but the debt. The ceiling would be the solution to the problem if they only stopped raising it.

The economist explained that this upcoming new Great Depression will be different due to the continued rise of prices and the loss of purchasing power of Americans. Schiff declared:

It’s probably going to be worse. It is a depression, but unlike the depression of the 1930s, where the people at least got the benefit of falling prices that provided some relief. This time, even the people who don’t lose their jobs are going to suffer because they’re going to lose the value of their paychecks.

How Inflation Numbers Can Be Misleading

Schiff also criticized the way the Consumer Price Index (CPI), data used to determine inflation, is calculated, stating that it is designed to give a low result. He said that “you basically have to double the official numbers to get a better idea of what’s actually happening with prices,” indicating that the real inflation number should be currently closer to 10%.

Even so, Schiff believes that high interest rates will not be able to control inflation and that the U.S. will have to deal with both. “Interest rates are prices. It’s the price you pay when you borrow money. The price is going up, just like the price of everything else,” he explained. Finally, he remarked that “as interest goes up, well, that’s just another cost that you need to pass on to your customers through higher prices.”

What do you think about Peter Schiff and his warning about an upcoming great depression? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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2023 has been a rollercoaster ride for the U.S. banking industry. The collapse of three major banks has sent shockwaves through the financial world, with their combined assets surpassing the top 25 banks that crumbled in 2008. The following is a closer look at what has triggered a ‘great consolidation’ in the banking sector, a recurring theme in the industry’s history over the past century.

A Listicle of Bank Consolidation, Failures, and Issues Facing the U.S. Banking Sector

The U.S. banking industry has taken a beating in 2023, with the market capitalizations of dozens of banks across the country dropping considerably in recent months. The reasons for this struggle are varied, with some blaming poor choices by financial institutions and others pointing fingers at the U.S. central bank. While it’s important to consider different opinions, a comprehensive listicle of information can shed light on the country’s ‘great consolidation’ in the banking sector and the largest bank failures in the United States. So, let’s take a closer look at these developments and what they mean for the country’s banking industry.

• In the year 1920, historical data reveals that the United States boasted a grand total of approximately 31,000 banks. However, by the year 1929, this number had dwindled down to less than 26,000. Since that time, the number of banks has experienced a precipitous decline, plummeting by a staggering 84%. As a result, fewer than 4,160 banks remain in operation today.
• Out of the 4,150 U.S. banks, the top ten hold more than 54% of FDIC-insured deposits. The four largest banks in the country have amassed a whopping $211.5 billion in unrealized losses, with Bank of America bearing the brunt of a third of that amount.

• The Federal Deposit Insurance Corporation (FDIC) provided JPMorgan Chase a $50 billion credit line and noted it lost $13 billion from the First Republic Bank fallout. The FDIC estimated the cost of Signature Bank’s failure to its Deposit Insurance Fund to be around $2.5 billion and the Silicon Valley Bank collapse cost the FDIC $20 billion, bringing the total to $35.5 billion.

• In addition to the recent First Republic Bank collapse, Pacwest Bancorp’s shares have been sinking steeply. Over the past six months, Pacwest has lost 73% of its market capitalization value. Presently, Pacwest is weighing strategic options and a possible sale, according to people familiar with the matter.
• Western Alliance Bancorp is also struggling with shares down 57% lower during the last six months. While several of the failed banks saw significant withdrawals like First Republic’s $100 billion outflow in March, Western Alliance claims it has not seen any unusual deposit outflows.

• Sources and statistics show that U.S. banks that provide mortgages lost an average of $301 for every loan that originated in 2022, down 87.13% from the $2,339 profit per loan in 2021.
• In the second quarter of 2021, banks acquired a record amount of government debt by obtaining $150 billion worth of 10-year Treasury notes. However, thanks to the Fed’s ten consecutive rate hikes, 10-year and 2-year treasury bonds in the U.S. are currently inverted. This means the banks with excessive reliance on long term bonds are struggling because the yields on the 2-year Treasury note are actually higher than the 10-year Treasury.
• On May 3, 2023, the U.S. Federal Reserve raised the benchmark bank rate and it is now at a 16-year high.
• In March, the four biggest U.S. banks by assets held, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo collectively lost $52 billion of market value.

What do you think about the issues U.S. banks face in 2023? Share your thoughts about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 7,000 articles for Bitcoin.com News about the disruptive protocols emerging today.