The Ledger: Welcome to The Ledger Newsletter

It’s Jen Wieczner here. Three of us—Robert Hackett, Jeff John Roberts and I—founded The Ledger last summer. We’ve grown from a section on Fortune.com to a weekly show “Balancing the Ledger” and a dedicated issue of Fortune magazine, on newsstands now. Today, we’re launching a distributed version of The Ledger—in other words, a weekly newsletter. We want to hear from you! Please send us tips and suggestions, and don’t forget to follow @FortuneLedger. You can also DM us on Twitter, Telegram (I’m @callmevx) and other secure platforms.

Now, without further ado, let’s kick off our genesis block.

IS THE ‘FLIPPENING’ COMING?

The great Bitcoin fork of 2017—when the original blockchain split last August to create Bitcoin Cash—appears to have ended pleasantly, at least for investors. The sum of the parts turned out to be greater than the whole: Within a week of the split, the two assets together were worth more than $15 billion in additional market value that didn’t exist prior to the fork.

Far away from Wall Street, however, the schism—which came about when two factions couldn’t agree on whether to speed up transaction times by expanding the size of units on the blockchain (Bitcoin Cash favoring larger blocks)—is still seething. There are signs the rift is growing more acrimonious, threatening to polarize the Bitcoin community around the world.

I witnessed the bitterness of the so-called scaling debate when I visited Tokyo in late March to report on new twists in the saga of Mt. Gox, the hacked Bitcoin exchange, for my latest magazine feature, “Mt. Gox and the Surprising Redemption of Bitcoin’s Biggest Villain”. There I found that much of the once tight-knit community had since become alienated by the Bitcoin Cash split.

I’m not going to analyze the technical merits of the scaling debate—regarding the speed and cost of transactions—here today, both for the sake of brevity and because the latest flare-ups have been less technological and more philosophical: The Bitcoin-Bitcoin Cash battles are now often over ethics, censorship, transparency, and even the political parties of their supporters.

Case in point: Coincall, a portfolio tracking site for cryptocurrency investors, this week labeled Bitcoin Cash a “shitcoin” for “intentionally misleading newcomers to believe it’s the ‘real’ Bitcoin, for example by misusing bitcoin.com and the @bitcoin Twitter handle.” (Last month, scandal arose after the @bitcoin account appeared to endorse Bitcoin Cash, and was subsequently suspended by Twitter.) But even if those criticisms are accurate, they have nothing to do with whether or not Bitcoin Cash is actually faster, cheaper or easier to use than Bitcoin.

In Tokyo, however, Bitcoin Cash now seems to dominate the Bitcoin scene: Supporters have their own meetups; their own bars accepting Bitcoin Cash—they even have their own Satoshi Nakamoto, an Australian named Craig Wright. (Wright, though, has failed to irrefutably prove that he is the mysterious creator of Bitcoin—and others have offered evidence debunking Wright’s claims.)

My trip coincided with the Satoshi’s Vision Conference, an event that makes the case that Bitcoin Cash is the true Bitcoin. At a happy hour following the conference, people exclaimed “Make Bitcoin great again!” One guest called out to a woman carrying a baby: “Future big-blocker right there!”

They aren’t joking around. “This is war,” said Aaron Gutman, an organizer of the Tokyo Bitcoin Cash meetup. Proponents predict the coming of what they call “the flippening”—when Bitcoin Cash will displace Bitcoin as the most valuable cryptocurrency, and be recognized as the “real” Bitcoin. They claim they’ve been unfairly persecuted by the Bitcoin majority, that their posts about Bitcoin Cash have been deleted from the main Reddit Bitcoin forum.

At the center of the controversy is Roger Ver, an early Bitcoin evangelist living in Tokyo and CEO of Bitcoin.com who has now thrown the full weight of his support behind Bitcoin Cash. “They called him the ‘Bitcoin Jesus,'” says J. Maurice, who runs the Tokyo-based Bitcoin mining company WIZ, and used to consult for Ver, but has since become estranged. “Now he’s like the Bitcoin Judas.”

To see how the Tokyo rift is spreading, look no further than a CNBC article from a couple of weeks ago bearing the headline, “Forget bitcoin. Now is the time to buy bitcoin cash: Crypto trader.” The article is based on an interview with Brian Kelly, CEO of investment firm BKCM. But Kelly didn’t actually advise against Bitcoin, and in fact owns both it and Bitcoin Cash. “I’m not taking sides,” he said in the same interview. “I just want to make money.”

He has that in common with most New York crypto investors I know. And if your goal is purely to make money, Bitcoin Cash has lately been a better bet than Bitcoin: In the past month, the Bitcoin Cash price is up some 115%, while the Bitcoin price has risen 30% by comparison.

But as for the potential flippening, it still seems a long way off: Today the value of Bitcoin Cash is worth just under 16% of the total value of Bitcoin—barely more than the 14% it was worth when it was created. I won’t say it can’t happen. But first it would help to at least have an open and honest debate.

THE LEDGER'S LATEST

Reddit’s Alexis Ohanian On His Return to Venture Capital, Bitcoin's Price, and Internet Cats by Polina Marinova

Square's Bitcoin Business Is Struggling to Make Money by Jeff John Roberts and Jen Wieczner

Reddit Plans to Take Bitcoin Once Again—Along With Litecoin and Ethereum by Chris Morris

Is the SEC Gunning for Ethereum and Ripple? Fat Chance by Jeff John Roberts

Ex-SoFi CEO Mike Cagney Makes a Comeback With a New Blockchain-Focused Startup by Polina Marinova

St. Louis Federal Reserve Says Bitcoin Is 'Like Regular Currency' by David Z. Morris

SEC Commissioner on Bitcoin: 'That Space Is Full of Troubling Developments' by Polina Marinova

DECENTRALIZED NEWS

To the moon... Goldman Sachs finally confirms it will trade Bitcoin. A $1 billion ICO for...venture capital. Bacoin joins the home of the wiener. Coinbase could be worth $8 billion. Bitcoin futures trading is spiking to record heights. Peter Thiel backs another crypto startup. Bitcoin Foundation founder predicts this is the last chance to buy Bitcoin under $10,000. The answer to a $400 Jeopardy question: 'What is Bitcoin?' You can bet with Bitcoin, Bitcoin Cash and Litecoin at the Kentucky Derby this weekend

....Rekt: Dr. Doom calls "bullshit" on decentralization—literally. Regulators think Ethereum's ICO "was probably an illegal securities sale." Iran bans Telegram. Time's up for crypto exchanges to respond to the New York AG. Vertcoin hacked, isn't really giving away freebies. Telegram calls off its ICO (after raising $1.7 billion). Iceland's $2 million worth of stolen Bitcoin mining computers are still missing. Warren Buffett won't be recommending Bitcoin at his annual meeting Saturday.

BALANCING THE LEDGER

This week, Chris Burniske of VC firm Placeholder joins our show "Balancing the Ledger" to talk about the implications of Goldman Sachs's foray into Bitcoin trading, why Silicon Valley Coin isn't a true "cryptoasset," and how to know if it's a good time to buy Bitcoin or not.

BUBBLE-O-METER

1-week return: Bitcoin: 3% (S&P 500: -1.4%)

3-month return: Bitcoin: 3% (S&P 500: -4.4%)

Year-to-date return: Bitcoin: -33% (S&P 500: -1%)

6-month return: Bitcoin: 28.5% (S&P 500: 2.6%)

MEMES AND MUMBLES

The New York Times article about Goldman Sachs's new Bitcoin trading operation included the below photo with this caption: "Justin Schmidt, left, who will run Goldman Sachs’s Bitcoin operation, with Marianna Lopert-Schaye, vice president of principal strategic investments, and Neema Raphael, who leads research and development."

Others quickly came up with alternate captions:

FOMO NO MO'

Don't miss out:  Decentralization has become part of the pop culture conversation in recent days—from Kanye West tweeting about it to HBO's "Silicon Valley" basing this season's entire plot line around it. Meanwhile, Brian Armstrong, the CEO of Coinbase this week addressed employee concerns that the company's centralized nature could conflict with the objectives of decentralized blockchain networks. Armstrong's response is worth reading in full, but here's an excerpt:

Fiat-to-crypto exchanges tend to be more centralized because they integrate with the traditional financial system....The overall point is that there will be both centralized and decentralized products which help create an open financial system, just like ISPs (centralized) and browsers (decentralized) both play a key role in the internet ecosystem. It’s a false dichotomy to pit one against the other because both are a part of the solution. Coinbase will continue creating both centralized and decentralized products that help accelerate the adoption of an open financial system.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.