This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to receive future editions.
Welcome back, readers, from what I hope was a restful holiday season. In our always-on world, it’s worth remembering the value of truly unplugging for a while so you can come back stronger and more focused.
Of course, the world does keep turning, and fintech and crypto saw plenty of action while The Ledger was on hiatus. Of particular note was the launch of Nakamoto.com, a new journal exploring high-level concepts around cryptocurrency and blockchain technology.
The new journal is, notably, headed up by Balaji Srinivasan, an entrepreneur and executive who has been broadly critical of established media outlets. In this age of hot takes, it’s admirable when anyone puts their money where their mouth is and tries to build a better version of something they think is broken.
In this case, though, Srinivasan may have gained some perspective on how hard it is to build a trusted publication. Nakamoto.com was met with almost immediate, widespread outrage among its ostensible intended audience: bitcoin advocates.
Understanding why, and what the blowback means, requires some context. In the world of cryptocurrency, the past year or so has seen deepening divisions between two notional groups. On the one hand are those sometimes referred to as ‘bitcoin maximalists,’ who believe for a variety of reasons that bitcoin itself should be the focus of crypto development and investment.
According to these folks, the enemy is anyone who supports nearly any cryptocurrency that’s not bitcoin – so-called ‘altcoins.’ These projects are seen as sapping the energy needed to advance the cause of bitcoin. The criticism is substantially driven by the high percentage of outright scams that plagued crypto at the height of the 2017-2018 crypto bubble, when hundreds of millions of dollars were funneled into fraudulent or doomed altcoins.
Nakamoto.com seemed to ignore this conceptual divide. It adopted its name from bitcoin’s pseudonymous creator, and specifically stated that all of its contributors would be pro-bitcoin. But bitcoin purists were quick to point out that many of the high-profile contributors were directly involved in currencies that arguably compete with bitcoin. They included Vitalik Buterin, cofounder of Ethereum; Roger Ver, cocreator of Bitcoin Cash; Michael Arrington, an advocate for XRP; and Zooko Wilcox, creator of Zcash.
This quickly got the publication branded as something akin to a scam itself.
At least one initial contributor, Adamant Capital founder Tuur Demeester, even asked for his name to be removed from the site, saying he was “not comfortable attaching my name to the platform.”
There was other fallout, including a high-minded Telegram group that was quickly overrun by hostile trolls and other bad actors, and had to be closed to new participants.
On one level, it’s a bit hard to credit the criticisms of Nakamoto.com. Blockchain is a relatively complex new technology, and an outsider would rightly wonder how it makes sense to malign efforts to fully explore its potential. The ‘bitcoin vs. shitcoins’ division is as oversimplified as most binaries (especially as it plays out in the overheated rhetoric of so-called ‘crypto Twitter’).
That may be exactly why the incident matters, though. Those hostile to established media have in recent years often pounced on perceived failures of reporters and outlets to be ‘neutral.’ There are certainly plenty of news sources that stray from even the broad ideals of being accurate and trustworthy, but many others (including Fortune and The Ledger) sincerely aim for them.
But neutrality itself isn’t as simple as it sounds, and is ultimately very much in the eye of the beholder. And when audiences bring sharply divergent worldviews to the table, establishing trust is a lot harder than it seems.
DECENTRALIZED NEWS
This edition of The Ledger was curated by David Z. Morris. Contact him at david.morris@fortune.com.
Credits
Vanguard introduces commission-free stock trading, joining other major brokerages ... Fundrise cofounder Dan Miller pivots to crowdfunding sustainable farmers ... Gaming company Razer is applying for a digital banking license in Singapore ... Along with 20 other companies competing for five licenses ... People got rich off some pretty weird stuff in 2019 ... The inimitable Josh Brown calls Goldman Sachs "a technology company operating in finance," endorsing the bank's makeover ...
Debits
A Scottish man killed by a fall onto a spiked railing in 2014 may have been the Russian mob's top U.K. money launderer ... Perhaps he should have jumped on the newest trend, money laundering through video games, instead ... The SEC claims that Telegram has been "refusing to disclose" how it spent $1.7 billion raised in a 2018 sale of crypto tokens ... A customer of Société Générale had her accounts closed after criticizing the bank on Twitter ... Foreign exchange company Travelex was hit with a major ransomware attack ... Job losses among bankers soared in 2019 ... Another report confirms the lack of diversity in the blockchain industry ... And a former Credit Suisse COO was surveilling his own colleagues.
Share Your 2020 Predictions (Again)!
Dear Readers: We have some bad news. Thanks to a technical issue, we didn't receive some of the 2020 predictions we solicited from you in December. We're working to recover the missing emails.
But if you want to make sure your voice is heard, please re-send your 2020 predictions for financial technology and blockchain.
Email these and other comments, tips, and projections, along with anything you want to share about yourself, to david.morris@fortune.com. We'll include the most insightful and/or hilarious comments in a Ledger edition coming soon.
BUBBLE-O-METER
11.8%*
*in five days
Bitcoin Rallied from $7,200 to $8,050 (give or take) between early Friday and Tuesday afternoon. Some speculation pegged the move to America's attack on Iran. The timing of the (so far) mini-bull run certainly could be seen to reinforce the longstanding assertion that Bitcoin is a hedge against global instability.
FOMO NO MO'
It’s the industry’s dirty little secret. Once you get beyond the slick iPhone apps and inflated tales of big-data mining and AI-generated lending decisions, you realize that many fintechs are nothing more than aggressive lending outfits for little-known FDIC-insured banks.
From Forbes' profile of Cross River, a conventional bank in the increasingly unconventional business of providing services to fintech upstarts including Affirm, Stripe, and Coinbase. When you take out a loan or receive a payment from these and similar companies, it may be Cross River that actually moves the money around.
It is impossible not to note similarities between this arrangement, and the relationship between big investment banks and penny-ante home loan originators and other 'non-bank lenders' ahead of the 2008 financial crisis. And according to Forbes, the loans originated by fintechs like Affirm are just as mobile as Florida mortgages, quickly bundled and sold on to hedge funds and the like.
They also sometimes show high default rates, despite claims that these firms' artificial intelligence can quickly spot good credit risks missed by traditional metrics.
I wonder if those lending algorithms know what a 'tranche' is.
THE LEDGER'S LATEST
Ripple Raises $200 Million to Promote Use of XRP Cryptocurrency - Jeff John Roberts
Rwanda Stands Out Amid Africa's Tech and Payments Buzz - Richard Morgan
Car Leasing Startup Fair Is Another Softbank-linked Cautionary Tale - Lucinda Shen and Alyssa Newcomb
Minority Home Buyers Can Get Better Rates from Algorithms - Jeff John Roberts
A Decade After the Financial Crisis, Corporate Finance Must Contend With These Ticking Debt Time Bombs - Larry Light
Why Tensions With Iran Pose an 'Asymmetric Risk' To the Stock Market - Bernhard Warner
MEMES AND MUMBLES
Frank Chaparro, news director for cryptocurrency and blockchain trade publication The Block, spotted in a very private moment.
Just a few elements of his Bitcoin Trader Starter Kit: All-meat diet, technical analysis, (cheap) whiskey, antacids. Can you find more?