How the Bitcoin Cash Split Unfolded

Last week marked one of the most dramatic in crypto markets this year. The split in the Bitcoin Cash network unfolded — it rattled wider crypto markets. 

First some background: Bitcoin Cash spun out from Bitcoin in August last year through a hard fork. Hard forks are non-backward compatible changes to the underlying protocol. This contrasts with back compatible changes to the protocol, which are called soft forks. A soft fork is a tightening of the protocol, since these changes will still be valid on older versions of the software. Users can choose to adopt these soft forks or not — an example of a soft fork in Bitcoin is SegWit. Hard forks on the other hands are not opt-in, instead they create a new set of rules and if not everyone upgrades, you have created a new crypto network, and one such network is Bitcoin Cash. Hard forks can come in two forms:

  • Non-contentious hard forks — this is when there is a consensus around an upgrade in the network. Networks like Decred and Tezos are building on-chain voting mechanism to build consensus around protocol upgrades.

  • Contentious hard forks — this is when just part of the network upgrades. An example of this is Bitcoin Cash, when about 10% of the network ‘forked off’ into the new network.

Bitcoin Cash made a non-contentious upgrade back in May. They are planning to continue to upgrade the network every 6 months through hard forks.

The difference this time around was that a competing upgrade proposal by nChain, called Satoshi Vision (‘BSV’), went head to head with the Bitcoin Cash ABC’s upgrade (‘BAB’).

We have been monitoring this situation for some time as it can create interesting arbitrage opportunities. We knew that BitMEX — the world’s largest crypto futures exchange was very likely to follow only one of the new chains. This was also their policy when Bitcoin forked last year. 

We had conviction that BitMEX would only follow one fork in a contentious fork. However, we cannot make money from this view if the market priced that belief in…So, did this occur?

Bitcoin Cash future at discount to spot Nov 1.

Bitcoin Cash future at discount to spot Nov 1.


The future was actually trading at a premium to the underlying index. For us, this seemed like a big opportunity to sell the future either against a spot position in Bitcoin Cash (arbitrage) or by itself (risk-arbitrage).

In the week leading up to the split, Bitcoin Cash rallied strongly. We believe the momentum was based on investors anticipating the fork and wanting exposure to the potential ‘dividend’ in form of a new coin. We didn’t anticipate this strong ramp-up in Bitcoin Cash’s price.

Big pump ahead of the fork.

Big pump ahead of the fork.

What then happened was a situation where many exchanges, wallets, etc. announced initial support for BAB with the possibility of listing BSV at a later date. It was clear that ABC had the majority of the industry on their side. However, this was not going to be just a contentious hard fork, but fork where BSV main supporters Craig Wright and Calvin Ayer announced they would destroy the other fork through a ‘51% attack’. A miner having more than 51% of the hash power has the power to rewrite the ledger or to censor transactions. This could potentially create a negative spiral where price of the coin being attacked declines in value, making it cheaper to attack, leading to an even lower price.

With BSV friendly miners accumulating 70–75% of the hash power of Bitcoin Cash in the week ahead of the split on November 15 the outcome became very uncertain.

The spread on BitMEX exploded in the days ahead of the fork:

Long the spread might have been the trade of the year.

Long the spread might have been the trade of the year.

This now turned into a ‘hash war’, where miners friendly of BAB needed to gather enough hash power to keep their network intact after a split. Craig Wright threatened to sell Bitcoin in order to fund this ‘war’:

Empty threat?

Empty threat?

Jihan Wu, the CEO of Bitmain and a supporter of BAB on his side threatened to ‘fight till death!’

Jihan Wu getting ready to defend BCHABC.

Jihan Wu getting ready to defend BCHABC.

This lead to wider uncertainty and was a potential trigger for the decline in the crypto market that we saw last week.

On November 16 at around 4.40am AEDT the split in the Bitcoin Cash network happened. 

So far no attack on BAB has taken place; for now we have a permanent split in the network.

We now have two new coins side by side. 

Binance CEO CZ on the split:

Binance CEO, Changpeng Zhao, getting tired of ticker changes.

Binance CEO, Changpeng Zhao, getting tired of ticker changes.

I noted that still lists Bitcoin Cash, a coin that no longer exists:

This can be confusing….

This can be confusing….

Thanks to the decentralised nature of crypto networks, social consensus trumps miners’ wanting to control the rules of these open networks:

Polymath Nick Szabo weighs in on the ‘hash war’.

Polymath Nick Szabo weighs in on the ‘hash war’.

For now it looks like two chains will continue to live side by side, and for some this is a victory. 

Open blockchains are crypto networks which we can choose to join or not. Resolutions are not fought with real weapons but with ideas and free markets (hash power mostly follows the market). 

This is how Vitalik Buterin, the founder of Ethereum, puts it:

Vitalik on ‘hash war’ as the start of something better to come.

Vitalik on ‘hash war’ as the start of something better to come.

The decentralised nature of these network means many different forms of blockchains can be tested in the open market and in addition different types of governance will emerge — everything from the decentralised governance structure of Bitcoin to the more formal governance of Decred and Tezos. The last week presented some interesting trading opportunities, but perhaps more importantly, it was a test of the anti-fragility of some of these networks — periods of hostility will make these networks stronger and more robust in the years ahead.

Henrik Andersson is the Chief Investment Officer of Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see

Blockchain vs Crypto

“I’m big on blockchain, but I’m not so sure about crypto...” a comment we’ve been hearing often.

There is a great deal of hype around blockchain revolutionising the world. Crypto is a scam, blockchain is robust.

Unfortunately, the hype, and this line of thinking, misses the mark.

Private blockchains are little more than glorified databases. They might lead to incremental improvements, but the greater technological leap forward is crypto networks - open, decentralised markets that allow participants to transact with a new basis of trust.

Blockchain and crypto are inseparable, and require a new, unfamiliar way of thinking.

Naval is a vocal critic of the ‘blockchain not crypto’ line of argument

Naval is a vocal critic of the ‘blockchain not crypto’ line of argument

Before I explain, let’s make sure the basics are clear.

Screen Shot 2018-11-13 at 10.40.48 am.png

Blockchain is a ledger that keeps track of crypto tokens that are the subject of that ledger.

Let’s dive deeper, using Bitcoin as an example.

The “Blockchain form of accounting” was invented to keep track of bitcoin. When a Bitcoin transaction occurs, the transaction is bundled together with other transactions into a ‘block’. The network needs to validate the transactions, to ensure they are free from fraud and error. Bitcoin miners and market participants prevent double spending by validating the block of transactions using a combination of computational power and mathematical cryptography (the basis for the broader name ‘crypto’). Once the block of transactions is validated, it is added to all previous blocks of Bitcoin transactions. Herein lies the term blockchain - the block is added to a chain of blocks, and we have a blockchain.

Fun Fact: the term “blockchain” was not used in the original Bitcoin White Paper published in 2008.

Crypto (or “Open Blockchains”)

Crypto assets (or ‘cryptocurrencies’, ‘tokens’ or ‘coins’) are traded on a blockchain. In the case of the Bitcoin network, bitcoin is the subject of the transactions. Bitcoin is transacted from one person to another and the Bitcoin blockchain keeps track of the transactions. If we think of Bitcoin as digital money, the system of maintaining the ledger is critically important. A system is needed to introduce scarcity to digital assets, otherwise participants could simply create more money or transact fraudulently, undermining the whole system and inevitably making it worthless. The blockchain solves this problem by preventing double-spending and introducing scarcity to these digital assets.

Crypto networks are a technological breakthrough. Crypto networks redefine trust. For the first time, people can transact peer-to-peer globally, at scale without the need for a trusted third party. Crypto networks are decentralised. Whereas previously a centralised party such as a bank or financial institution was required to process a transaction, now, with blockchain technology, the network processes the transaction. Participants can transact with each other with a new basis of trust. Trust is placed in the open, verifiable system that in turn relies on mathematics and computer code. The removal of centralised third parties removes inefficiencies, costs and has created enormous value.

One of the key takeaways is that crypto networks are open. The network is open to anyone with an internet connection to both transact and validate transactions. The more independent users that take part in the verification, the more secure and decentralised the networks. This openness is related to the trust equation above. The openness lends itself to this new basis of trust.

“As society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants”

Open blockchains are not without limitations. Open blockchains are not a good solution to store data and they are currently limited by scaling issues. Both of these limitations relate to the structure of an open, decentralised network. Each piece of information stored in a blockchain, such as details of a transaction, sits in hundreds or more nodes around the world (more than 100,000 in the case of Bitcoin). This is in contrast to the alternative - a centralised repository that stores and controls the data. The structure of storing data in multiple places around the world can make open blockchains costly and slow, although it should be noted that some of the world’s best developers are working on ways to solve these problems.

Private Blockchain

A private blockchain seeks to modify blockchain technology for use by a private consortium. A private blockchain does not use crypto tokens or assets.

We have seen in the press a number of stories about how private blockchains will revolutionise the world, increasing efficiencies, saving companies billions of dollars. IBM has developed the “Hyperledger Fabric,” an emerging de-facto standard for enterprise blockchain platforms. Walmart has announced it is putting its lettuce supply on the blockchain, pushing suppliers to use IBM’s blockchain-based software. Global shipping giant Maersk has announced a collaboration with IBM, sharing information about individual shipment events in an effort to reduce shipping administration costs.

While the hype is impressive, it is exactly that, just hype. A private blockchain is a glorified database. There might be incremental improvements for re-structuring the private database, such as improved error checking and validity, but it’s hardly groundbreaking. If people tracking lettuce want to input incorrect information on the blockchain, they can still do it. If Walmart wants to reverse lettuce transactions, it still has the power to alter the data. IBM have taken new technology that doesn’t need a middleman and have made themselves the middleman.

If a trusted third party could administer the ledger, then a blockchain is a “solution in search of a problem.” CB Insights

In 2016, global mining behemoth BHP Billiton announced a program to apply blockchain technology to its supply chain, to enhance security around real-time mining data, including the movement of rock and fluid samples. The hope was coordinating disparate contractors and moving them onto a standardised blockchain based system. In April 2017, the program was abandoned. BHP cited immature technology that wasn’t ready for enterprise adoption. However, I suspect the real reason is a blockchain simply wasn’t required.

The groundbreaking part of blockchain technology is an open system in which anyone can participate, removing centralised third parties and transacting with a new basis of trust. A private blockchain is, by definition, closed and does not offer these qualities.

Screen Shot 2018-11-13 at 10.42.21 am.png

Internet vs Intranet

A similar example to crypto versus closed blockchains is the Internet vs Intranet. In the early days of the internet, people used to talk about the intranet as the really big innovation - and the public internet as being untrustworthy and unregulated - "no one will ever bank or shop on an open internet". The rest, as we say, is history. It will likely be a similar outcome - private blockchains will likely exist but will not be nearly as significant as public blockchains.

Why The Hype?

The most obvious reason for the hype is the PR machine. “Blockchain” is like “Artificial Intelligence” and “Medical Marijuana” - it’s a buzzword du jour. At the start of the year, at the peak of the hype, Kodak announced KodakCoin, an Initial Coin Offering to help track photo rights and royalties for digital photographers. The stock price promptly tripled (although since the announcement, the stock price has unsurprisingly dropped back below pre-January prices). It is inevitable that we will continue to see more blockchain hype in the media.

I have developed my own theory as to why people like blockchain, but not crypto. My theory relates to availability bias - failure of logic due to placing more weight on information that is available to the individual. People are familiar with corporations and controlled entities. The idea of a blockchain being controlled by a government or company is easier to digest than an open blockchain. A private blockchain fits within the framework of familiarity. Crypto assets do not. Crypto networks are a new, difficult concept to understand. It’s a frictionless path to gravitate to the familiar, instead of wrestling with the new. I believe this is the main reason why people make the statement at the beginning of this article: “I’m big on blockchain, but not so sure about crypto.

The idea of a blockchain being controlled by a government or company is easier to digest than an open blockchain. A private blockchain fits within the framework of familiarity. Crypto assets do not.

Apollo Capital’s view is that understanding crypto assets requires a different, new way of thinking. An open-mind is a crucial first step. Public blockchains and transparency around transactions is a new concept, at odds with how society has previously functioned with closed, private transactions. Many of today’s crypto enthusiasts took a long time to understand crypto - myself included. We encourage people to keep an open mind, keep learning, reading, listening and following updates from reputable sources like Apollo Capital (#selfplug).

Security Tokens, Explained

Patrick Byrne an American entrepreneur, e-commerce pioneer and CEO of now also a security token pioneer. Picture from Wired Oct 2014 issue.

Patrick Byrne an American entrepreneur, e-commerce pioneer and CEO of now also a security token pioneer. Picture from Wired Oct 2014 issue.

Qiao Wang, part of the founding team at Messari recently wrote this on Twitter:


We don’t think Qiao is wrong, in fact we at Apollo generally agree with the view presented here, with the exception of governance. There is significant, and growing value in owning a stake in the governance of a crypto network. 0x, Decred, and Maker are three examples in our portfolio of tokens that derive at least some of their value from governance.

This post will look at at the second category Qiao Wang listed above, namely tokens that give right to cash flow.

By security tokens, we do not mean future utility tokens are issued by a central entity prior to network launch. Note that since the SEC announced that all ICOs they have looked at are securities — many ICOs are structured as securities. The vast majority of these however look to be converted to utility tokens at a later date when the network is live.

Tokens that give right to cash flow

Cash flow to a security token can come in two forms, either as a native digital asset or an off-chain ‘traditional’ asset. I will call these categories Tokenised Securities and Blockchain Native Security Tokens respectively. Let’s start with the former.

Tokenised Securities

Some of the potential benefits include:

  • Illiquid assets — like VC interest, hedge fund interest, real estate etc can become liquid

  • Lower issuance cost, i.e. fundraise at much lower cost

  • Global markets could become accessible with less friction

  • Trade fractions of an asset

  • Overall lower cost, ease of transfer and settlement

  • Potentially enables an open financial system as security tokens become compatible with smart contracts

  • Instant convertibility between crypto assets and currencies (in the future we might be able to pay our expenses with our portfolio of tokenised securities).

Below a simple illustration comparing a crypto asset like Bitcoin and a security token like Robinhood which equity is trading on the Swarm platform:


There are a number of challenges for Tokenised Securities. Since they are associated with an underlying asset, this means that possession of the crypto token doesn’t equal possession of the underlying asset. If you hold bitcoin and you lose your private key — the bitcoin is lost forever. If you hold equity through a token, the equity doesn’t disappear — a trusted intermediary is needed. That’s a very different value proposition to crypto assets. So far, this category has had limited traction and much work is needed to solve custody, oracles, and the legal enforceability of smart contracts across jurisdictions. 

Blockchain Native Security Tokens

This category may or may not be securities from a legal standpoint as typically these won’t have a company behind them. One example is Maker, a token in the MakerDAO stablecoin system. There is a foundation in Switzerland supporting in the development of the software behind MakerDAO. The Maker token is used for decentralised governance but also receives cash flow in form of a sort of buyback from a fee emanating from the issuance of the stablecoin Dai. This is just one example of a purely software based system that looks and feel like a security by having an on-chain cashflow stream in the form of a dividend or a buyback. Other examples include a set of stablecoins where ‘revenue’ from transaction fees are used as collateral in a two-token system. Yet another example is Binance Coin which represents a middle ground where you have a for-profit company providing cash flow in the form of a quarterly buyback and burn. Importantly, the token itself however doesn’t represent equity in Binance.

Blockchain Native Security Tokens open a whole new playbook where only the imagination of the software developers will limit the construction, functionality and the resulting value creation. Maybe our new generation of ‘companies’ will be software code running on networks like Ethereum and Dfinity with no entity or person behind them. This is a fascinating thought that has the potential to reshape the fundamental structures of our economy and society.

We believe the second category is vastly more interesting than the first category. That’s because the first category is just a traditional asset (like equity) that is traded on the rails of a blockchain but still requires off chain record keeping. On the other hand, Blockchain Native Security Tokens have the potential to transform the very concept of companies.

Finally, for those who would like to explore this area more, here is a list of the major player in the regulated tokenised security space:


Henrik Andersson is the Chief Investment Officer of Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see

Stablecoins: A Core Primitive, Underdeveloped

Achieving stability in crypto: the trade offs are currently decentralisation, stability and scalability.

Achieving stability in crypto: the trade offs are currently decentralisation, stability and scalability.

Stablecoins are an incredibly exciting area of crypto. We are seeing a lot of innovation happening in this area.

Stablecoins are crypto assets pegged to the price of another (stable) asset like US Dollar (USD) or Gold.

Stablecoins are a primitive, a critical building block for mass crypto adoption.

Recently, we have seen Circle and Coinbase, Paxos, and Gemini launch regulated stablecoins in the United States. Earlier this year, the algorithmic stablecoin Basis received over US$130 in funding from Bain Capital, Lightspeed Ventures, Stanley Druckenmiller, among others. A few weeks ago, Andreessen Horowitz made a US$10 million investment in MakerDAO.

Let’s break down stablecoins —

In today’s marketplace, one thing is certain: not all stablecoins are created equal. People are still attempting to create an optimal stablecoin.

We divide the space in three broad sections:

  1. Fiat backed stablecoins: These are stablecoins backed by fiat in a bank account or escrow account. By far the most successful model so far. Apollo Capital invested in TrustToken, which is backing trueUSD.

  2. Crypto backed stablecoins: These tokens are backed by a volatile asset such as Ethereum. The most popular one includes dai/MakerDAO. Apollo Capital is a holder of the Maker token. Others include Australian project Havven and South Korean

  3. Algorithmic stablecoins. These use a form of seignorage shares where supply is adjusted to make sure a peg is not broken. Two projects in this category are Basis and Fragments.

We think there are a number of factors that should be optimised over to create a successful and sustainable stablecoin, not just stability. At least as important are decentralisation, scalability and liquidity.

Generally, fiat backed stablecoins rate very poorly on decentralisation as they are backed by money in a financial institution controlled by a single entity.

It is our view that decentralisation is essential for creating an open financial system. A decentralised stablecoin is permissionless (open to anyone), censorship resistant (transaction finality can be guaranteed) and trustless(we don’t have to trust our funds with a third party).

Fiat backed stablecoins will be regulated. USDC can be blacklisted — it is not decentralized or censorship resistant.

Fiat backed stablecoins will be regulated. USDC can be blacklisted — it is not decentralized or censorship resistant.

The holy grail would be a decentralised, fully backed stablecoin.

Here are some of the reasons we are excited about the stablecoin ecosystem:

- If we can create a relatively stable crypto asset, we can increase the crypto ecosystem massively. Many of economic functions that traditional fiat currencies serve, would be able to migrate.

- We could do merchant payments in crypto without the need to convert back to fiat; we can lend, borrow, and pay salaries using a stablecoin.

Remittances could be made on the rails of Ethereum, meaning they are fast, cost little, and settle almost instantly.

- We see stablecoins is a basic primitive for smart contracts.

- Derivatives are low hanging fruit for smart contract technology with an integrated stablecoin

- ICOs and STOs, our new methods of fundraising, will likely be financed using stablecoins.

- Stablecoins are mainly used today as a hedge for traders and investors.

- If we have trusted stablecoins, traders may not feel the need to sell back to fiat (and the much slower banking system) during a market correction — and instead stay in the crypto ecosystem.

- As a side effect, as when crypto exchanges create more stablecoins pairs, we will likely see more of a differentiated return profile between crypto assets.

Much work needs to be done to create an optimal stablecoin, but the race is on.

We are seeing an explosion of stablecoins; some that are pegged to the US Dollar (USD), and others to fiat currencies like Australian Dollar (AUD), Japanese Yen (JPY); some to the Consumer Price Index (CPI), and others to Gold. In fact, I’ve been helping Melbourne Mint launch a Gold back stablecoin called Meld (

The crypto market is yet again reinventing itself. However, on the eve of the 10 year anniversary of Satoshi’s white paper, let’s recognise the long-term promise of Bitcoin as not only a store of value but a stable medium of exchange — the ultimate stablecoin.


Henrik Andersson is the Chief Investment Officer of Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see

Unprecedented Value Capture in Web 3.0

We are moving to what we believe is a new era of decentralisation. The next web, Web 3.0 will be an open web where anyone is free to innovate without having to be restricted to the walled gardens of the current web, Web 2.0. This is how we like to illustrate the coming transition:

Web 3.0 will unleash a new wave of innovation.

Web 3.0 will unleash a new wave of innovation.

For entrepreneurs this is great news, anyone can build on top of a platform like Ethereum, that’s the power of a permissionless blockchain. They are not restricted by the terms of services for an app store and they don’t have to give away a substantial part of their revenues to a third party. For the users, the benefits are security (centralised databases sooner or later gets hacked), ownership of data and identity and the freedom to move your data between the coming ecosystem of decentralised apps, or ‘dApps’.

Another way to think about this transition is to look at the value capture in this transition. Union Square in 2016 published the now famous ‘Fat Protocol’ hypothesis. This is our simplified version of the fat protocol:

Crypto hedge funds love the Fat Protocol hypothesis!

Crypto hedge funds love the Fat Protocol hypothesis!

The idea is that value is following the data, so when we move to a decentralised world where blockchains are the new protocols for data and value — that is also where most of the value will be captured. We will have a massive ecosystem of application on top of these new protocols, but that’s not where the majority of the value will accrue.

We would like to add to this picture by stating that Web 1.0 and Web 2.0 will still be present alongside Web 3.0. Just like we have some mostly static informational web sites today reminiscent of Web 1.0, as we move to a more decentralised web, today’s most popular services will likely still exist. Facebook and Twitter will very likely still be present on the web for a long time still, and they are likely to continue to capture substantial value even in the future. We are indeed perhaps not primarily decentralising the current web. Instead blockchain technology enables a much bigger web through human and machine interactions that simply wasn’t possible before.

Apollo’s vision of the future is therefore a much bigger web that can capture more value than ever before:

Not only different but bigger!

Not only different but bigger!

Thanks to blockchain technology, we can now add substantial value to the current web, we believe mostly along three lines:

  • Digital Ownership. Blockchain technology makes digital ownership possible. Be it of money, data, identity or digital goods.

  • Smart Contracts. With smart contracts an open financial system will be built and available to anyone in the world. Borrowing, lending, derivatives and the democratisation of fund raising. A longer term vision encompasses the rise of decentralised autonomous organisations or ‘DAOs’.

  • Tokenisation of Everything. I’ve previously written on this topic and how real estate, hedge fund and VC interest will be tokenised and then later today’s liquid assets.

To summarise, Web 3.0 is less about the coming disruption of Facebook, Twitter and Uber and more about enabling new forms of value capture, uniquely enabled by blockchain technology. This is the exciting future we invest in and the reason we are so passionate about our mission at Apollo Capital.

Henrik Andersson is the Chief Investment Officer of Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see

Apollo Capital, a16z Crypto, Polychain among investors in DFINITY

Screen Shot 2018-09-04 at 3.53.49 pm.png

DFINITY may well be the most exciting project of 2018. 

It is a visionary undertaking with an exceptionally talented team. Apollo Capital is proud to have invested alongside a16z Crypto and Polychain Capital. 

Apollo Capital invested in a $102 million round jointly led by Andreessen Horowitz (via its crypto fund a16z crypto) and Polychain Capital. 

Both a16z and Polychain were investors in a $61 million round DFINITY announced earlier this year. 


DFINITY is a decentralised computation network that is able to make digital platforms constructed from trustless, autonomous, and open source software. The ownership and governance of these platforms is controlled by a distributed community of users and developers, rather than companies.

Why is having distributed ownership and governance of a computational platform a feature and not a fault? 

The answer lies in the outsized control that Web 2.0 incumbents have on almost every aspect of their user and developer base. 

a16z explains the extent of this reality:

Today’s web platforms like Google, Facebook, and Twitter control each and every interaction between users on the platform, each user’s ability to seamlessly exit and switch to other platforms, applications’ potential for discovery and distribution, all flows of capital, and all relationships between applications and their users.

Total control, in other words. A handful of companies dictate the rules of the game. 

This breeds mistrust and is not sustainable.

Today’s centralised platforms have an incentive to extract value from users and developers. This problem has become more acute as the relative power of platforms has increased substantially, locking users into walled gardens that house the network of most value.

What is DFINITY?

DFINITY is a scalable and sufficiently decentralised ‘Internet Computer’. 

A functional internet computer is a fundamental building block to a Web 3.0 economy, which itself relies of the data layer merging with the protocol layer at scale

DFINITY’s distributed computing network allows the creation of smart contracts, perhaps more accurately called verifiable programmable agreements, to run at scale. In doing so, DFINITY may perform a function that today relies on a myriad of organisations, companies, firms, people, and paperwork. 

a16z writes:

“The property of trustless verifiability is the core reason why DFINITY can credibly be used to disintermediate the central organizations that today mediate many of our interactions with others.”

A programme that is able to verifiably and trustlessly execute could be used to settle large swathes of the financial economy, for example, to mediate contracts about fundraising, trading, lending, derivatives, payments, to insurance which may be better expressed in code than in legalese.

The inherent efficiencies that this kind of internet computer could present to the global economy are too significant to ignore. 

However, it does rely on an internet computer that can perform at scale — for a user base of billions. This has yet to be achieved. 

Where DFINITY Fits In

Ethereumin its current state is clogged by simple applications with only hundreds of users. This is because Ethereum is a platform that relies on every miner in the network executing every computation. While this is strong in terms of security and decentralisation, it does not scale. Crypto kitties and FOMO 3D, hardly world changing applications, respectively consumed a large proportion of Ethereum’s network capacity almost rendering it unusable.

Ethereum is making headway on the scalability headache with state channels, plasma, and sharding, but the problem still hasn’t been cracked.

EOS’ssystem of delegates ensures scalability, but at the cost of decentralisation. By delegating a group of trusted and static actors, the cost of bribing the delegates is likely to be lower than the possible reward, exposing the network to human biases and greed. 

DFINITY, on the other hand, have devised a compelling solution, that sits somewhere between the currently unscalable but secure Ethereum and the scalable but potentially insecure EOS. It achieves this by randomly selectinga delegation each block. Because it is impossible to know who will be selected, and each block only lasts for 3 seconds, the ability to maliciously influence the network is small.  

Apollo Capital invests in projects that have the potential to radically reshape the global economy. Permissionless, open, and decentralised blockchains fuelled by a scarce token have the ability to collapse the cost mediation thereby replacing the plethora of middlemen that exist in our economy. 

Project like DFINITY could scale human collaboration to unprecedented levels by virtue of that collaboration not relying on trust. 

We are thrilled to have invested in DFINITY and look forward to being a supporting role in this important stage of their journey. 

James Simpson is an investment analyst at Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see