In this issue

From the Editors Desk

Dear Reader,

What happens when there is no consensus, and governance breaks down into two distinct groups that instead of working together, decide to split and go their own separate ways?

Thats exactly what happened in the world of cryptocurrency and blockchain this past week. Bitcoin Cash (which separated from Bitcoin back in August 2017) has forked again, with a faction called Bitcoin ABC splitting off Bitcoin Cash. But if you were to have sat with the rhetorical question I started this missive with, really it could have been a commentary on what were experiencing politically around the world. In this way, I think that is the truest challenge of our human nature.

What happens when two distinct points of view cant agree? In blockchain, those lined up behind the two tribes split. In the case of Bitcoin Cash and Bitcoin ABC (the group breaking away via hard fork of Bitcoin Cash), the market has decided. The miners (akin to the electorate) decided to stay with Bitcoin Cash, voting with their work. The majority of miners continued to provide hash power to Bitcoin Cash and continued doing the important job of adding transaction records upon which that blockchain protocol is based. Bitcoin ABC failed to win the miners over.

It reminds me of something most of us learned as children from that old Aesop fable about a bundle of sticks: the importance of cooperation. That we are stronger together. Being divided exposes weaknesses and presents more opportunities for attack, with fewer allies to help overcome obstacles. It underscores the adage: United we stand, divided we fall. In blockchain, or otherwise.

Until the next time,

Angie LauFounder and Editor-in-Chief

Forkast.News and Decrypt are inviting you to Around the Campfire, an online salon with cryptos biggest names. This week features an exclusive discussion with the Filecoin team about their launch, the roadmap ahead and the future of decentralized storage.

By the numbers: Bitcoin over 5,000% increase in Google search volume.

Bitcoin crossed the US$18,000 mark for the first time in three years and is currently trading at $17,770 at press time. According to a Citibank note to institutional clients titled, Bitcoin: 21st Century Gold that was shared on social media by community members, managing director Thomas Fitzpatrick is predicting bitcoin prices to reach US$318,000 by the end of 2021.

Forkast.Insights | What does it mean?

Predicting that bitcoin will skyrocket to six-figure valuations is a hobby as old as time. John McAfee perfected the craft, but he was far from the only one. So much of crypto Twitter would love to chime in with their large-figured forecasts to build positive sentiment around the coin and push prices to the moon.

As bitcoin moves further to becoming an institutional-grade asset versus being a speculative commodity and a not-very-useful currency, its going to get more analyst attention from big name financial institutions, which in turn generates headlines such as this. But that doesnt mean the methodology is valid. Citibanks analysis, which points to bitcoin hitting US$318,000, is based on parallels to the gold market from the 1970s to the present. Gold, as the report notes, was constricted around the $30 mark until it was officially de-linked from the U.S. dollar in 1971 and became a popular hedge against inflation in the 1980s free of a tie to any currency.

But can all of this be applied to bitcoin? In some ways, yes. We will likely see a long run in prices as the market hunts for an alternative asset class with the likely weakening of the U.S. dollar due to unprecedented debt loads and deficits as recovery from Covid-19 defines the early 2020s. Should we be expecting a 20-times multiplier on current prices? Not likely. Golds rally was because of a tectonic shift in the ability to convert gold to dollars. Theres nothing like that in store for cryptocurrency.

By the numbers: Bitcoin Cash ABC over 5,000% increase in Google search volume.

Bitcoin Cash (BCH) experienced its second hard fork into Bitcoin Cash and Bitcoin ABC after the BCH community rejected a proposed update from developer Amaury Sechets group, Bitcoin Cash ABC. Sechet, the self-described benevolent dictator of Bitcoin ABC, proposed 8% of mining rewards be redistributed to the development team.

Forkast.Insights | What does it mean?

The fork of Bitcoin Cash to create Bitcoin Cash ABC its second after the creation of Bitcoin Satoshi Vision in 2018 is best described as contentious, with a debate centered around the proposed infrastructure funding plan (IFP), which taxes miners at 8%, with the proceeds earmarked for future development of the protocol. At the same time, Bitcoin Cash ABC proponents argued that there was a pathway forward for Bitcoin Cash with creating larger block sizes, but this development costs money and hence the need for the tax. Opponents of the idea argued that this would increase centralization and was antithetical to the idea of cryptocurrency in the first place.

Battle lines were drawn between Bitcoin Cash Node (BCHN) and Bitcoin Cash ABC (BCHA). Given Bitcoin Cash Nodes associations with Craig Wright who lives in the fiction of being Satoshi some big names have come out swinging against it. Vitalik Buterin called on team BCH to not give in to pressure and stand their ground, even if it meant a fracture in the community, while Bitmains Jihan Wu has called Wright a fake and encouraged both sides to work things out instead of going through with a fork.

But despite all of this, BCHA seems to be on the losing side of history. According to CoinDance, the ABC team simply cant muster the hash power that the other side can. The fact that BCHN has pulled so far ahead in terms of support from miners shows the idea of an 8% tax simply wasnt a winning proposition despite the involvement of Craig Wright on the other side.

By the numbers: Tron over 5,000% increase in Google search volume.

Trons total transaction volume in Q3 increased by 2,725% when compared to Q2 of this year. According to the dapps analysis company DappRadar, This Q3 increase was enough for Tron to edge out Ethereum in total transaction volume for the month of October. Tron generated US$280 million while Ethereum generated $159 million in transaction volume.

Forkast.Insights | What does it mean?

Is the cryptocurrency world now taking a shine to Tron and its controversial founder, Justin Sun?

Trons spike in total transaction volume is largely because of Ethereums congestion and DeFi protocols looking for a new temporary home. During this quarter, a number of DeFi platforms were launched on Tron, including the eponymous Sun token, which has over US$200 million staked, or the JUST family of protocols that lets anyone develop a turnkey solution for DeFi, as well as the Decentralized Exchange JustSwap.

Despite the bad press and many controversies involving Trons founder Sun, Tron is a well established blockchain with plenty of liquidity. Its in a perfect place to catch the spillover from Ethereum for industry players that dont want to bet on an unestablished startup chain. This isnt in any way supposed to canonize Tron as something other than what it is, but rather a matter of Tron being in the right place at the right time.

By the numbers: Ethereum over 5,000% increase in Google search volume.

Ethereum is experiencing turbulence leading up to the launch of phase 0 of Ethereum 2 which is currently scheduled for December 1 if conditions are met. Ethereums major infrastructure provider Infura experienced a service outage, which brought down popular dapps such as MakerDAO and Metamask.

Forkast.Insights | What does it mean?

A platform thats supposed to be the worlds computer became much less useful overnight because a centralized software infrastructure provider failed.

Ouch! Take that, blockchain maximalists.

As much as people like to tout the decentralized nature of Ethereum, the reality is, things like dApps and ERC-20 tokens rely on infrastructure providers like Infura to act as a bridge between the blockchain and their apps. Infuras application programming interface (API) allows blockchain apps to write to the blockchain. Everything from price feeds to token withdrawals were impacted.

Decentralized Ethereum relies on centralized pipes that act as a layer between the blockchain and software. Of course, Infura doesnt have a monopoly on this; there are other providers. But the problem is, there are points of failure. So what sort of decentralization exists if you are reliant on one of three major infrastructure providers? Of course, any large institution such as an exchange would have multiple providers but it seems like many were still adversely impacted regardless.

Theres no obvious solution to this, as there will only be a handful of providers of that scale, but its something to think about when extolling the virtues of blockchains ability to decentralize.

The Digital Currency Research Institute, a unit of Peoples Bank of China, signed a pact with Lakala Payment, a third party payment company in China, to further develop the payment functions of the new DCEP digital yuan.

Forkast.Insights | What does it mean?

Any sort of payments will require a payment processor, the entity to move funds from the customers bank to the merchant, and Lakala Payment group is no stranger to that. In fact, the firm was one of the first credit card payment processors in China with a network of 30,000 terminals across 38 cities by the end of 2009.

But then it got disrupted. Once smartphones became popular in 2012 and 2013 and WeChat and AliPay became payment giants, card-based transactions became, for many, a thing of the past. WeChat and Alipay were disintermediaries for the payments sector as they handled the payment processing business themselves everything was done on the app, both the seller and merchants accounts exist on the platform. Firms like Lakala found themselves pushed to the sidelines, without a market.

Chinas new DCEP digital currency is now changing this dynamic. With DCEP, you still need to have third parties handle the process of transferring the yuan. Unlike the WeChat and AliPay era, there are once again multiple parties involved: the customers bank, the merchants bank, and the path between them.

One of Chinas goals for the DCEP digital yuan may be to wrestle control away from the nations current mobile phone payments duopoly so that no private company will have such singular influence and power over the nations money supply. This is where firms like Lakala can be useful.

Coherent Hong Kong, Series A, US$14 million

Hong Kongs Coherent, an insurance technology startup, closed a $14 million Series A funding round led by Cathay Innovation, an early growth venture capital firm in San Francisco. Cathay Innovation is a subsidiary of the French-headquartered venture capital firm Cathay Capital. Coherent provides insurance digitization tools for businesses as well as customer-focused insurance sales platforms. The company stated that the funds would go into talent expansion in Hong Kong, Singapore and China as well as create new teams in Japan and the United States.

LinkAja Indonesia, Series B, US$100 million

LinkAja, a Indonesian state-owned and state-funded digital wallet app and payment platform, closed a $100 million funding round led by Singaporean ridesharing, courier and food delivery superapp Grab. Other investors included Jakartas BRI Ventures, which invested in its earlier Series A round, which was a result of state takeover. In a news release, the company explained that funding was to go toward expansion opportunities as well as research and development.

Forkast.Insights | What does it mean?

This week we have two different stories of FinTech. First, a bet on the continued rise of insurtech in rich-world Asia. In the U.S., investors have deployed $8.5 billion in capital into the sector. Within Asia, that number is closer to US$6 billion. As the economy matures in the region, this sector is bound to continue to grow. Payments is another growth story and a frequent theme for VCs. Cross-border transactions and trade have often been the pathway to wealth for developing countries, and in fragmented Asia there is a huge market in curing this pain point.

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Ep. 39 | Bitcoin soars to new highs as Bitcoin Cash hard forks into two. Tron blows past Ethereum. - Forkast News