In this issue
- Walmart to Litecoin: Your money’s no good here
- Cardano’s Alonzo hard fork: Teething problems and triumphs
- NFTs in China: Next on the block
From the Editor’s Desk
The story of cryptocurrency is in many ways a story of control.
Right from the industry’s birth, with Bitcoin, it was about wresting control of money from governments, central banks and other bastions of traditional finance that were perceived as having failed the people and communities they were supposed to serve.
More recently, the story has become one of controlling what the great crypto experiment has unleashed.
Control — as retail colossus Walmart found out the hard way this week — involves having a grip on information, especially one’s own. So presumably it may have been a lack of controls among a number of others that led to this week’s public release of a bogus press statement claiming that Walmart would begin accepting Litecoin for payment.
The release, the credulous dissemination of its contents as “news,” and the fumbled response to it by Litecoin itself, may have pleased the perpetrators of the scam as the coin’s value soared, but they underline the need for investors to exercise some self-control in doing due diligence before rushing to buy in such a volatile environment as the crypto market.
In Forkast.News’s own back yard, control is not something that is alien to the rulers of the region’s biggest country.
Indeed, the Chinese Communist Party has a historic affection for control, as the nation’s citizens and the rest of the world are regularly reminded.
The latest part of the Chinese economy that Beijing believes needs to be brought to heel is its enormous tech industry, of which the digital asset market forms a small but increasingly conspicuous part.
Having walloped China’s once-thriving crypto sector into submission, it appears that the government may now be lining up non-fungible tokens for similar treatment. That much at least has been telegraphed by state-controlled media outlets — typically a reliable indicator that a clampdown of some kind is imminent.
And all this comes as Beijing’s rollout of a central bank digital currency — described by human rights advocates and others as yet another means of state surveillance and control — gathers momentum by the day.
For an innovation brought into the world by the emancipatory ideal of taking financial power out of the hands of centralized authority, the story of cryptocurrency — and the digital asset space more broadly — remains, perhaps now more than ever, one of control.
Until the next time,
Founder and Editor-in-Chief
1. Walmart and Litecoin: Dazed and coin-fused
By the numbers: Walmart Litecoin — over 5,000% increase in Google search volume.
An announcement of a partnership between cryptocurrency Litecoin and Walmart, in which the retail giant was supposedly planning to accept the token, has been debunked as fake. After a press release was circulated on Monday making the bogus announcement, a Walmart spokesperson hastily dismissed the notion of any such partnership. Walmart is now working with GlobeNewswire, the press release distribution service that hosted the now depublished announcement, to investigate the incident.
- By the time Walmart had the chance to react to the fake statement, mainstream media outlets including CNBC and Reuters had already picked it up, and a verified Litecoin Twitter account went so far as to celebrate the “news.” The value of LTC — the Litecoin token — leapt by as much as 33% to a high of US$235 from around US$175 before returning to around US$180. LTC was trading at US$183 at press time.
- Cryptocurrency-watchers also noticed unusual activity at crypto exchange heavyweight FTX, with some claiming a hack involving 45,000 Bitcoins was in motion. Sam Bankman-Fried, the chief executive of FTX — the world’s third-largest crypto derivatives exchange and fourth-largest spot exchange by trading volume — wrote on Twitter that the movement of a large number of Bitcoins had resulted from a consolidation of unspent BTC transactions. “For those who don’t know, Bitcoin withdrawal processing involves combining together UTXOs (unspent transaction outputs) deposit addresses etc,” Bankman-Fried tweeted. ”A few days ago we consolidated some UTXOs into an address to make processing quicker.”
Forkast.Insights | What does it mean?
Rumors often take on a life of their own, gaining traction and gathering embellishments frequently with far-reaching consequences, both positive and negative, foreseen and unforeseen. Among markets, the cryptocurrency scene is even more susceptible to the power of prattle than most — to the extent that even Litecoin founder Charlie Lee was surprised by the apparent announcement that the world’s biggest company by revenue had teamed up with his Bitcoin wannabe.
“This morning I woke up and found out that Walmart is accepting Litecoin, and I was like, ‘Wow that’s awesome,’ — and it turned out to be fake,” Lee told the press.
Lee explained that anyone could accept Litecoin without having its issuer’s permission. At first glance, that fits neatly with crypto’s ethics of open-door adoption and integration.
But look a little harder, and it quickly becomes apparent that there’s a gulf between the entities that maintain blockchains and those — the villainous and the virtuous alike — who use their technology. Lee told reporters that the Litecoin Foundation couldn’t do much to combat fake news, suggesting that in order to remain true to the decentralized model under which cryptocurrencies operate, people could use them for fair means or foul.
In the Walmart-Litecoin case, the scammers obviously opted for the latter, jacking up the market cap of Litecoin by one-third and doubling market activity in less time it takes to do a weekly shop at one of the retailer’s stores. If the crypto industry really wants mass adoption, it needs to make sure its networks — of which information is one — are more trustworthy and secure, one press release at a time.
2. Cardano sticks a fork in it
By the numbers: Cardano — over 5,000% increase in Google search volume.
Input Output Hong Kong, the core development team behind Cardano, on Sunday announced the successful completion of the Alonzo hard fork at epoch 290, bringing smart-contract functionality to the blockchain. In a blog post published on the same day, Cardano said the project was still in its early days, but that it was at the point when “the mission truly begins.” The Alonzo hard fork, named after American mathematician Alonzo Church, will allow the network to be used to support decentralized exchanges, house NFTs, and run oracle programs that draw in external data to trigger smart contracts.
- The recent launch of decentralized exchange Minswap on the Alonzo testnet was quickly followed by a temporary shutdown due to users experiencing concurrency errors. Cardano’s critics were quick to point out that the network was capable of handling only one transaction per minute due to issues involving Minswap’s use of the network’s extended unspent transaction output model.
- Input Output labeled the criticism “FUD” (fear, uncertainty and doubt) and “misinformation” in a Twitter post.
- On Sept. 12 — the day of the hard fork — the price of ADA, Cardano’s native cryptocurrency, reached US$2.77 before dropping to a weekly low of US$2.34. ADA was trading at US$2.40 at press time.
Forkast.Insights | What does it mean?
Hard forks should, perhaps, be renamed “difficult forks.” As even their current name suggests, they’re never easy.
Bitcoin Cash was attacked by its own community when it tried to introduce a tax on miners. Steem effectively split in two when Tron Foundation chief Justin Sun, who acquired the Steemit app, tried to fork the network, and Ethereum’s hard forks have consistently been marred by infighting, public spats, and in some cases reversals. Now it’s Cardano’s turn.
As is to be expected with any seismic upgrade, there were always going to be teething problems, and Charles Hoskinson’s network has not been immune to such: bugs in contracts, not enough decentralized apps, and, of course — as we’ve seen this week with Litecoin — the eternal struggle to manage public opinion.
Cardano has taken a slow and steady approach to network upgrades, and its rollout of smart-contract capability has long been expected. That never meant its Alonzo fork would go without a hitch. Far from it.
For any seasoned crypto-watcher, the latest hard fork is one among many growing pains in the industry, and a part of the gradual but inevitable march towards a multi-chain future in which blockchains mingle with one another, providing users and developers alike with a better experience.
For now, it’s too early to tell how this week’s upgrade will affect Cardano’s long-term future. But if all the other hard forks on all the other networks are anything to go by, we can expect more market volatility over the coming weeks.
3. NFTs in China: Will the party soon be over?
As non-fungible tokens continue to gain popularity in China, and as the country’s tech giants tap the business, a Beijing metropolitan government-owned newspaper this week hit out at an NFT platform over potential risks involving its payment model.
- Beijing Business Today reported on Monday that NFT buyers’ cash could be retained by NFT marketplace UMX.ART because buyers were asked to make payment before placing bids in auctions, despite this being of the understanding that the platform would return their money if their bids failed.
- Li Zhang, co-founder and chief technical officer at UMX.ART, told Forkast.News that buyers’ transactions were handled in a dedicated account, and that the company had strict internal rules in place to prevent money transfers from that account to other accounts it managed.
- Zhang said UMX.ART was seeking finance sector partners to act as custodians.
- The Beijing Business Today report followed an op-ed published on Friday in the Securities Times, a sister paper of state mouthpiece People’s Daily, criticizing NFTs as hype and suggesting that digital assets should serve the “real” economy by tokenizing physical assets rather than virtual ones.
- China has seen growing interest in NFTs lately, with tech giants such as Alibaba and Tencent making forays into the market. This past weekend, Alibaba-controlled online retailer Tmall launched a moon cake NFT — a representation of a traditional snack eaten during the Chinese Mid-Autumn Festival — which sold out in a day.
Forkast.Insights | What does it mean?
Beijing’s relationship with China’s technology sector has turned from tolerant to toxic in less than a year as Chinese leader Xi Jinping has opened a new front in what has been described as his “war on everything,” taking on the US$4 trillion industry.
China has mounted more than 50 regulatory actions against companies in the tech sector that involve a dizzying array of alleged offenses — from antitrust abuses to data violations. The threat of government bans and fines has weighed on stock prices, too, costing investors an estimated US$1 trillion in losses. Crypto has been a high-profile casualty of the regulatory offensive.
Beijing’s crackdown on cryptocurrency mining has effectively set the industry into exile abroad, and its ban on trading has trashed the industry.
More specifically, in May, China banned financial institutions and payment companies from providing crypto-related services. In June, mass arrests were made involving people suspected of using cryptocurrencies in ways frowned upon by the Communist Party and state agencies. And in the same month, regulators dialed up pressure on banks and payment businesses to stop providing cryptocurrency services, and Weibo — a Twitter-like Chinese social media platform — suspended crypto-related accounts.
As the Communist Party continues to celebrate 100 years of existence, a wide-ranging crackdown on multiple types of supposed misconduct, especially in financial markets, has gained pace. Crypto has long been synonymous with crime in the eyes of the party and its apparatchiks, with PlusToken, possibly the biggest-ever crypto Ponzi scheme, disproportionately affecting Chinese citizens.
The Communist Party is dead set on bringing its version of order to digital markets, and the NFT sector — which initially had seemed to have been spared the treatment doled out to the cryptocurrency industry — appears to be next in line for a whipping. NFT projects in China may want to tread carefully and avoid undue attention.