Crypto IRL

This is a special edition of the 5x5 Crypto News focused on the Bitcoin 2021 conference.

Last weekend, I attended the Bitcoin 2021 conference in Miami. I’m new to this space so I figured it would be a great way to learn and connect with others. This is an attempt to capture some of my thoughts. This is the first in a 2-part series. This piece will focus on general observations, the next piece will address some of my learnings. 

First things first, I did not know what to expect. Bitcoiners have been caricatured in the media as cultists and speculators. Others see them as innovators and technologists. Would I fit in? 

Secondly, this conference was focused on bitcoin only. This meant that ethereum and other projects in the crypto sphere would not take center stage. Would I be surrounded by only the most fervent bitcoin maximalists? My sense is that multiple blockchains and projects can win. 

Well, I am SO glad that I went. I continue to find growth and delightful experiences by putting myself out there and taking a risk to venture into unfamiliar terrain. I left the conference with new friends, new ideas, and increased confidence in the future. 

Much has been said about the conference. A lot of the media focus has been negative. Some folks have latched onto the most colorful and sensational elements. Remember that 50,000 people traveled to Miami with 12,000 attending the conference while others participated in a smorgasbord of satellite events. A handful of loud voices should not define a community. In the words of Chimamanda Adichie, “...beware, there is danger in a single story”.  

Observations

1. Is Miami the crypto capital?

Mayor Saurez has been wooing the crypto community to Miami. I met a 26-year old crypto hedge fund manager who relocated from New York City during the pandemic. He shared that everyone in the luxury high rise he lived in worked in crypto and they were mostly 25-30 years old. He was enjoying the networking, lifestyle and lower cost of living in Miami. While the city has made strides, the talent and funding pools still pale compared to NYC and SF. As the country emerges from the lockdown, will Miami continue its crypto rise? 

2. Diversity: What brings you here?

Bitcoiners traveled down a variety of paths yet converged on the same destination. Motivations ranged from ideology to profit seeking, efficiency to innovation. I enjoyed this diversity of thought. I liked engaging with everyone from libertarian ideologues to pragmatic opportunists and bitcoin maximalists to blockchain agnosts. At times it felt like an intellectual playground. If you are a curious person, there is space for you within this big tent. 

3. Diversity: Who is not in the room?

For the first time in my life, I had to wait 10-15 min to use the men’s restroom. In contrast, there was never a line for women’s restrooms. Bitcoin operates at the nexus of technology, economics and philosophy. These sectors have less gender and ethnic diversity than the US population. Unsurprisingly, the conference demographics was not representative of the general population. It’s important for all communities to have a seat at the table as new technologies are being developed and deployed. Again I say, there is room for you within this big tent.

4. Hey stranger, do you want to be my friend? 

I came to the conference by myself. I struck up many random conversations and I ended up meeting people from all over the US and across 4 continents. Y’all are friendly! I found strangers quickly became friends as people were generous with their time and resources. Thank you! We debated ideas. We talked about our personal hopes and aspirations. The next challenge will be staying in touch. Any ideas?

5. What are you working on?

Everyone is a founder. It was inspiring to meet so many folks betting on themselves and building the future they want to see. One of my favorite conversations was with an entrepreneur starting a VC focused on investing in black and African crypto startups. If you are interested in investing in the VC, I would be happy to make introductions.

In addition, I also had more vulnerable conversations with founders who were struggling and questioning whether to pivot. I learned that the crypto bull run has made many folks independently wealthy. They could self-fund their startups without raising money but some were missing external input. This helped reinforce the idea that investors don’t just bring money but insight. Their feedback could be invaluable while launching and scaling a business. 

Closing thoughts

Overall, I am really happy I went. Knowing what I know now, I would do it again. That said, I am unsure if I will go to the next bitcoin conference. My tickets were pricey but I met many folks who travelled to Miami just to attend the satellite events without going to the conference. Sure if I got affordable tickets, I might go again but I think one could get significant value just from attending the satellite events. I am also really curious about going deeper into DeFi (decentralized finance) and other parts of the crypto ecosystem. I would be open to attending a conference on that.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

It’s Memorial Day weekend. This is a time for somber reflection. Thank you to all who gallantly serve in the military. My thoughts are particularly with the families of those who are deployed and those who fell in the line of duty.

One of my buddies is a captain in the US Air Force. He grew up as an army brat. His family frequently relocated to US military bases across the Lower 48 and in different countries. I imagine sending money across countries was an ordeal. The legacy financial system is slow (2-4 days) and costly. I am excited that digital currencies can help these service men and women gain access to faster, better solutions.

News

1. Everyone wants chips

* There is a global shortage of computer chips. Computer chips are now used in cell phones, smart cars, gaming consoles, and so on. Apple is the biggest buyer of computer chips; the shortage contributed to delays in releasing the iPhone 12.

* Last year Nvidia, the 3rd largest computer chip manufacturer, introduced chips specially designed for cryptocurrency mining. In Q1 2021, the company earned $155M revenue from these crypto chips and expects about $400M sales in Q2.

* I expect more chip manufacturers to go down this path. However, concerns about the energy consumption of crypto mining could lead more protocols to shift from proof of work (mining) to proof of stake. Proof of stake does not require mining.

2. China silver lining

* China recently added bitcoin mining to a list of industries that requires government scrutiny to protect the economy. This move spooked bitcoin miners. Some turned off machines. Others are shipping them abroad. This is a big deal because China hosts about 70% of global bitcoin mining capacity.

* One consequence is that bitcoin mining difficulty dropped by 16%. Mining difficulty is a measure of how much computation power is required to mint new bitcoin. The difficulty rises and falls based on the number of computers competing on the network.

* This is good news for folks like me who mine bitcoin in the US. It means our machines don’t have to work as hard and may receive more yield in the short term. However, I don’t think i this is a short-term bleep.

3. USDC is a freak

* USDC adoption is up an eye-watering 28x in just one year. In that time, this stablecoin has supported over $615B transactions. This mind boggling growth is driven by traders, DeFi, high-interest savings accounts, cross-border payments and more.

* Circle, the issuer of USDC, just raised $440M. This is the single largest fundraising round by a crypto startup…so far. The funds are going to support growth and strategic investments. Circle has also been on a hiring spree.

* I am really excited by stablecoins and USDC is in particular. Stablecoins are digital currencies that are pegged to the value of a dollar. Thus, 1 USDC is always equal to $1. Unlike dollars, USDC can be transferred instantly and cheaply. There are big opportunities for stablecoins to disrupt cross-border payments and more.

4. Coinbase takes on crypto FUD

* One hundred years ago newspapers urged their readers to stick to horses and avoid cars. In 1995, Bill Gates famously called the internet a passing fad.

* New technology is often met with FUD (fear, uncertainty, doubt). Blockchain and cryptocurrency are too. There is a lot of misinformation and propaganda. Sadly, traditional news sources have repeatedly missed the mark.

* Coinbase is launching a fact-check blog. I think this is a great idea because there is a lot of FUD in this emerging sector. That being said, one still has to ask questions and test to see if the logic is sound. Coinbase is a profit-seeking company after all :-)

5. Built with Bitcoin

* UNESCO reports that over 260 million children worldwide do not attend school. About 10% of them are in Nigeria.

* Built With Bitcoin (BWB) is a non-profit founded by the founders of Paxful, a peer-to-peer crypto exchange. BWB aims to build 100 schools. They recently launched their 4th school in Kaduna, a state in northern Nigeria.

* Digital currency and decentralized finance aims to democratize access to quality financial tools. However, you can’t take advantage of these opportunities if you can’t read. Education is key. I absolutely love this project. I am also developing an education focused non-profit. More later.

Question

What do you think about dogecoin for payments?

* Dogecoin was created in 2013 as a joke. Recently, it has surged in popularity as Elon Musk and others touted it.

* Elon Musk and Mark Cuban are pushing the use of dogecoin for payments. Mark Cuban’s Dallas Mavericks basketball team became the first company set-up to receive dogecoin payments via BitPay. Elon Musk’s SpaceX is now accepting dogecoin payment for a trip to the moon.

* I am not convinced. Why would you exchange a depreciating asset ex a car or coffee for an appreciating one like bitcoin or dogecoin? I wouldn’t. For payments, I think stablecoins like USDC or Central Bank Digital Currencies are more likely to gather steam. Buyers and sellers would appreciate a currency with stable values.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

I hope you got a slice or two. Yesterday was Bitcoin Pizza Day. On May 22 2010, Laszlo Hanyecz bought 2 Papa John’s pizzas with 10,000 bitcoin. It was the first commercial transaction with bitcoin. Today, those pizzas would be valued at $333M. That’s a pretty penny per slice. Crypto enthusiasts celebrate the day by chowing down on pizza. Unfortunately, my allergies have been in over-drive so it’s been a soup and sleep kinda weekend for me….still I got in one slice :-)

This was a turbulent week for the crypto market. In the future, we will look back and see that this week was a blessing in disguise. Two main reasons: (a) buy when the price dips and (b) accelerate redistribution of mining capacity beyond China and more renewable sources

News

1. Crypto market crash

* The price of cryptocurrencies crashed across the board with Bitcoin plunging 30% in one week. Last week, Elon Musk had tweeted concerns around the environmental impact of bitcoin mining. It is thought some other institutional investors may come under pressure about Bitcoin emissions too.

* Elon Musk clarified that Tesla continues to hold $1B worth of Bitcoin but the market was already spiraling down. Bearish sentiment from the OCC (banking regulator) and China only added fuel to the fire.

* In spite of these concerns, Bitcoin is still trading 3x price this time last year. Cathie Woods of Ark Investment continues to hold a long-term forecast of $500,000 per bitcoin. Market corrections and volatility are part of this journey. I used this as an opportunity to extend my position across Bitcoin and Ether.

2. China crypto crackdown: a blessing in disguise

* A high ranking government official in China declared a “crack down on bitcoin mining and trading” as China continues to ramp up it’s launch of its digital currency.

* Some miners reportedly panicked and dumped bitcoin onto the market. This increased supply further lowered the price of bitcoin.

* China has about 65% of global bitcoin mining capacity. This could accelerate a more equitable distribution of mining capacity. This a golden opportunity for new bitcoin mining facilities to be built and powered by renewable sources.

* My sense is that decentralized systems like bitcoin are philosophically at odds with the ethos of the communist party. Therefore, Bitcoin could join a long list of technology solutions that are effectively banned in China including Wikipedia, Google, Facebook and Netflix.

3. New OCC to review all crypto guidance

* The new acting head of the OCC, a key bank regulator, does not believe rules allowing banks to engage with digital currencies and blockchains involved all relevant stakeholders. Therefore, the OCC, will review all crypto rules.

* An African proverb says “if you want to go fast, go alone but if you want to go far, go together”. I wonder if the OCC pushed out a slew of crypto guidance last year to force other regulators to react.

* My gut says review really means “revise” crypto guidance to make it more restrictive or higher bars.

4. BlockFi promotion goes wrong

* Fewer than 100 people were impacted and less than $10M is still outstanding. BlockFi has apologized and revised procedures to ensure this does not repeat.

* One person received 701 bitcoin ($10M) instead of $701. This transaction was reversed but a few others transferred the bitcoin rewards off the platform.

* Mistakes happen. Citibank erroneously wired $500M. Traders mishaps have turned million dollar transactions to billion dollar fiascos. This got me wondering if the back-office operations are more manual than expected. BlockFi is now partnering with Matt James, the first black Bachelor, to promote crypto. Hopefully no mishaps!

5. US Treasury and IRS change things up

* US treasury is calling for businesses to report digital currency transactions greater than $10,000 to the IRS. This proposal is on par with transactions with fiat currency (ex dollars) greater than $10,000

* The IRS plans to more than double it’s size by hiring 86,000 people over the next 10 years. The goal is to more aggressively enforce compliance and close the $7 trillion “tax gap” by going after people who cheat on their taxes.

* I think these are great moves. Improved enforcement of rules could increase government revenue and reduce risk of the government printing more money

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

This week I spent some time with family. We had lots of great conversations. I was persuaded to change my position on a couple topics. This led me to reflect on the importance of being open-minded and willing to adjust views when presented with new evidence. The tragedy is that many people miss the advent of new technology or new ideas because of their mindset. In 1995, Bill Gates famously said that the internet was a passing fad. Can you imagine your life without the internet today? I can’t.

News

1. Moneygram launching crypto: 20x ATMs

* Moneygram has over 410,000 locations around the world. The company provides global money transfer and bill pay services.

* Moneygram is partnering with Coinme, a cryptocurrency exchange, to enable people buy crypto with cash or withdraw it from brick-and-mortar locations.

* This is a big deal because there are only about 20,000 crypto ATMs worldwide. This partnership could 20x that number. Crypto ATMs are often used by migrants sending funds back to their home countries. They also help reach people who may not have smartphones or regular access to the internet. I think this could help democratize access to crypto.

2. Diem moves back to US, picks Silvergate

* The Facebook-backed Diem project (formerly known as Libra) is relocating from Switzerland to the US and partnering with Silvergate Bank to launch a stablecoin

* Facebook is going to become a payments giant. FacebookWith the recent launch of WhatsApp Pay in Brazil and India, Facebook, with over 2 billion users across its platform, is gearing up to become a payments giant

* Expect the competition for global P2P (person-to-person) and merchant payments to heat up. Circle, the issuer of USDC, has been snapping up executives from Diem while PayPal has big ambitions and is rumored to be launching a stablecoin. Stay tuned.

3. Coinbase bans salary negotiation

* Last year, the New York Times alleged that female and black Coinbase employees were paid 8% and 7% less, respectively, than their peers in the same role.

* This week, Coinbase announced it was banning negotiation and offering the same pay package to all new hires into each role. However, promotions and pay increases would continue to be tied to performance.

* This new policy has generated mixed responses. I think it is a great step to eliminating pay disparities and encouraging meritocracy. I applaud Coinbase for taking action. Let’s see how this experiment goes.

4. Tesla STOPS vehicle purchases with bitcoin

* Elon’s tweet felt like the shot heard all around the world. It reignited concerns about the environmental impact of bitcoin mining. Some say up to 70% is powered by renewable sources.

* But this was a big nothing burger. Tesla continues to hold over $1B of bitcoin. More importantly, only a small group of people were using bitcoin to buy Teslas.

* Elon Musk is a modern day polymath genius. He is trying to colonize Mars…surely he could help drive down the environmental impact of bitcoin mining. Offer solutions, don’t just point problems.

5. Crypto becomes a force for good

* This week, Vitalik Buterin, the 27 year old founder of Ethereum, donated $1.5B worth of cryptocurrencies to COVID-19 relief in India

* Recently, Crypto Twitter users donated over $800,000 to a child battling leukemia whose parents were struggling with hospital bills

* There are so many more examples of cryptocurrencies being a force for good. Money and power don’t change who you are, rather, they reveal your true nature. Love to see more examples like this. I am working on a couple ideas too :-)

Questions

I’d like to dip my toes in crypto but I don’t know if I can trust these crypto exchanges. I would feel more comfortable going with my bank or stock trader app. What do you think?

* You are not alone. Survey by NYDIG found that 70% of people would prefer to access digital currencies through their bank. Unfortunately, most banks are not there yet but the tide is turning. Revolut and US Bank both enable customers to do so and I expect there will be more announcements over the next 12 months.

* Do you already have a CashApp, PayPal or Robinhood account? These FinTechs enable users to buy and sell a few cryptocurrencies.

* I have tried a number of exchanges. I’m actually gone to beta-test Okcoin’s revamped app. Now, Coinbase is the de facto option for a lot of people new to crypto, however, I have been impressed by Okcoin for 2 reasons: (a) lower fees (b) ease of set-up: I think it takes about 17 mouse-clicks to establish an account while Coinbase and others have more than double that.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

Mayday! Mayday! We have a situation. Crypto continues to move at the speed of light. Also, it’s May already! There’s still time to hit the gym to get that summer bod. Get it.

This week, a lot of the developments point to the continued maturation of the sector. Obviously, there is still a long way to go but let’s celebrate the progress. In the explore section we introduce a set-up that enables you to earn bitcoin while taking a hot shower. Intrigued? Let’s go.

News

1. Galaxy Digital buys BitGo for $1.2B

* Galaxy Digital and BitGo may not be familiar names. BitGo stores digital currencies for companies like Nexo. Galaxy is focused on institutions too.

* Lately, I have been thinking about consolidation in the crypto space. There are more than 14,000 banks in the US but the top 3 account for 30% of all deposits.

* I expect a cluster of large diversified digital currency companies will emerge and consolidate. Galaxy is on that list. It’s rumored to be going public later this year.

2. NYDIG and FIS partner to enable banks support crypto

* Bravo! This was a smart move. FIS is a leading provider of bank technology systems. NYDIG enables institutions to buy, sell and hold crypto.

* I love this partnership because most banks are incredibly risk averse. This union brings credibility and helps ease the process for banks to support crypto.

* I expect NYDIG will partner with other technology providers. Additionally, its competitors like Paxos and Anchorage could do the same. It’s gonna heat up!

3. US Bank enables customers to buy, sell and hold crypto

* I was impressed to learn that US Bank established its Blockchain & Digital Currency Practice in 2015 when Bitcoin was $200.

* Billions of dollars are flowing out of bank accounts to Coinbase and friends. Those dollars are not coming back. This is a threat to bank’s business model.

* I expect more banks to offer these services, especially given the FIS and NYDIG news. Crypto exchanges should brace themselves for increased competition.

4. Visa partners with Tala to give the underbanked access to USDC

* Tala is serving the global underbanked. It allows anyone with a smartphone to apply for a loan without credit history and receive a decision in minutes.

* Tala will now issue Visa payment cards linked to its digital wallets. Its customers will be able to spend USDC at more than 70 million merchants worldwide.

* I love the mission of Tala. 3 billion people are underbanked. Some of them are in my extended family. I think this partnership could help support remittances and other use cases. I’m rooting for y’all!

5. Grayscale sponsors NFL’s Giants

* Recently, FTX won the naming rights to the Miami Heat arena. Now crypto has come to football. These sponsorships send a clear message: crypto is here to stay.

* Grayscale is the world’s largest digital asset manager with $46B under management. It’s based in New York, it’s fitting to sponsor the home town team.

* This got me thinking, if I struck it big, what team would I sponsor. Right now, it would be the Houston Rockets. The name was just made for skyrocketing crypto. Plus, Houston is where I got my first job after college there and I still have lots of friends and family there. Can you imagine the Ogunnaike Arena? Hahaha!

Explore

Did you know your water heater could produce bitcoin?

* Ok…that is not technically true. It’s more the other way round, your bitcoin miner could heat water for all your domestic needs.

* Wise Mining provides a set-up to do that! Bitcoin mining is the use of powerful computers to solve hard problems that yield bitcoin. It produces a lot of heat.

* This waste heat can be captured and recycled to heat water and reduce your energy consumption.

* This might make sense if you were already planning to mine. However, if you weren’t planning to do that, beware that mining is energy intensive. Prepare for your electric bill to rise but it could be profitable over the medium term.

Question of the week

What are your thoughts on dogecoin?

First of all, I am not an investment professional nor do I provide investment advice.

My friend’s friend bought $200 of dogecoin in 2018 and it’s now worth about $40k! Remind me, what was I doing in 2018?!

What are your goals?

* Traders make money from volatility. It almost doesn’t matter what commodity it is. If it moves, they are happy to trade it and make a quick buck.

* Long-term investors study the fundamentals to understand if it solves a real-world problem. If it does, they then consider if the price is fair.

I’m gonna guess that you are the latter. Do your own research and remember don’t invest anything you are not prepared to lose. Personally, I have zero dogecoin. Good luck!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

Spring is upon us! Flowers are blooming, the sun is shining and allergies are in season. (Sneeze!) This week I gave a Blockchain 101 presentation for an Austin-based company. It was great discussing what blockchain is and how it could impact a variety of industries. I’m super pumped about the future. What a great time to be alive! This edition, I’ve introduced a new section called “Question of the week” where I address a reader’s question. Keep the texts and emails coming, let me know what’s on your mind.

News

1. Cardano is supporting education in Ethiopia

* Ethiopia’s Rift Valley is known as the ‘cradle of humanity’. A generation after famine wreaked havoc on the ancient land, the country has had one of the fastest growing economies in the world for a decade. Now blockchain has come to play.

* IOHK, the company behind the Cardano protocol, is partnering with Ethiopia’s government to reduce academic fraud and improve record keeping.

* 5 million students will receive a Cardano blockchain-based ID to track academic performance. 750k teachers will use the system too. A Chinese company will be providing laptops and tablets too.

* This solution could be scaled across Africa. Beyond education, there are blockchain experiments across Africa in property titles, health and supply chain. These blockchain solutions are a giant step up from the existing broken systems. Stay tuned.

2. Andreessen Horowitz launches $1B crypto fund

* When was the last time your investment went up 300x in 8 years? The firm first invested in Coinbase in 2013 at $1 per share. Coinbase recently went public, the shares closed at $298 on Friday. That’s a 300x return in 8 years.

* The tech VC is reportedly raising up to $1B for its third crypto focused fund. Previous funds included investments in Coinbase, Compound, Anchorage etc.

* I’m excited to see what companies and themes they will focus on in the next fund. Chances are those ideas will be mainstream in about a decade.

3. Paxos is the 3rd crypto firm to snag a federal charter from the OCC

* Paxos provides stablecoins-as-a-service, exchange and custody products; and crypto brokerage services to clients like PayPal, Revolut and Credit Suisse

* It is the first crypto firm regulated at the state (NY) and federal levels; enabling Paxos to serve customers across the US while adhering to the highest standards

* I’m excited about Paxos mission to modernize financial market infrastructure and enable the movement of any asset, any time, in a trustworthy way

4. Binance to launch NFT platform

* In June, Binance will launch what it hopes will become the worlds’s largest NFT platform. This new entrant will compete with OpenSea, Nifty Gateway etc.

* The marketplace will have 2 tracks. The premium will feature artists and exclusive partners. The trading track would allow anyone to sell or buy NFTs.

* Binance operates the largest crypto exchange; they have a big vision including payments and now NFTs. It’s large user base is a competitive advantage.

5. JP Morgan completes bitcoin change of heart

* Jamie Dimon, CEO, called bitcoin a fraud and threatened to fire anyone who traded it. He later regretted his comments and affirmed his belief in blockchain.

* The bank is expected to launch an actively managed investment fund with bitcoin for its high net worth clients this summer. About-face complete!

* This raises another question. Why ask legacy companies about technology that is disrupting them? Remember Blockbuster dismissed Netflix.

* For the record, I think JP Morgan will endure but I am not not convinced all banks and financial institutions will.

Explore

1. Urgh, taxes. Did you know you could buy crypto with your 401(k)?

* Digital currencies are taxed as assets. This means users have to pay capital gains taxes (15-25%) whenever they sell digital currencies. For example, if you purchased 1 bitcoin for $1,000 then 2 years later you sell it for $5000, you would have to pay long-term capital gains tax of $600 ([$5000-$1000] x 15%]).

* Long-term investors could consider using tax-advantaged retirement funds to buy digital currencies. Some 401(k) plans permit alternative digital assets.

* Otherwise, investors could use self-directed retirement accounts like Choice

2. What’s smart money buying?

* If you have already acquired positions in bitcoin and ether but curious what else to consider, you might like the list below.

* Messari, a leading digital assets research house, analyzed the portfolios of over 35 crypto focused VCs and hedge funds. They identified the most commonly held digital assets, besides bitcoin and ether, to be Polkadot, Keep and Uniswap.

Question of the day

Should I leave my crypto on the Coinbase exchange?

* Would you cry if your favorite crypto exchange was hacked and you lost all your digital assets? If the answer is yes, then you should reconsider your strategy.

* One option is to distribute your assets across a variety of platforms. Bitcoiners love to say “Not your keys, not your cheese”. Basically, if you don’t self custody your private keys to your digital assets then you could lose them.

* The refrain was born of pain. Many OGs lost eye-watering sums of bitcoin in hacks. Today, exchanges have strengthened their security but you never know.

* Lately, I’ve been checking out Casa. It provides 10x the security of a hardware wallet by using an app. It’s Multisig blends security, privacy, and control. Check it out!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

Woohoo! This is my 20th edition! I started writing on a whim without a plan. I knew I wanted to learn more about crypto and share with others interested and so I just started. Thanks for coming along on this ride. Be sure to invite others who might get a kick out of this too. There is room at the table.

Quick rant: I intentionally do not spend a lot of time talking about the price of bitcoin or other cryptocurrencies. Developments in this ecosystem are going to transform our lives, the products we buy and build. Sometimes, I feel like the price is a distraction. #DollarCostAverage #BuyTheDip #StackSats #HODL

News

* Luxury goods get on blockchain

* Over $600B of fake goods are sold each year. How would you feel if you unknowingly bought a fake $5,000 Rolex watch or $50,000 Birkin bag?

* LVMH (ex Louis Vuitton), Prada, and Richemont (ex Cartier) formed the Aura Blockchain Consortium to provide customers with proof of authenticity and ability to track ownership and post-sale repairs.

* This is huge for the pre-owned market for luxury goods. Maybe one day you could whip out a phone and scan watches, bags, jewelry to find if its real.

* Binance US names Brian Brooks as CEO

* Binance US is the American arm of the world’s biggest crypto exchange. The company has a big vision with projects in payments and stocks.

* For example, the US stock market is closed more hours than it is open, Binance has tokenized Tesla stock so that you can buy and sell it 24/7/365

* However, Binance US needs a steady hand to navigate complex regulatory environment. Brian is the crypto-loving former head of a bank regulator. Sounds like a win-win!

* Venmo goes crypto

* Do you remember writing checks or using cash to pay your nanny? Person-to-person payment solutions like Venmo and CashApp have changed the game.

* Venmo is owned by PayPal. Last year, PayPal announced it’s grand vision for digital assets like bitcoin and stablecoins.

* Now Venmo enables users to buy, hold, and sell a few cryptocurrencies. They have over 52 million users in the US. This is a big advantage over crypto exchanges like OKCoin who have to work hard to acquire new users

* Crypto mining to subsidize renewable energy

* Electricity from wind and solar is now cheaper than natural gas. However, it is not consistent. The wind is variable and sun only shines during the day.

* Building bitcoin mines at wind and solar facilities would enable them to gobble up any surplus electricity. It could subsidize these investments.

* Square and Ark Investment partnered on a research project exploring this topic. If implemented, it would be a win for the climate and the bitcoin network. It would end the narrative that crypto is bad for the environment.

* NYDIG acquires bitcoin mine financier

* The supply of bitcoin mining machines has not kept up with the surging demand. The price of machines has more than doubled in the past year.

* Time is of the essence if operators want to capture record high bitcoin mining revenue. Arctos Capital provides financing for bitcoin mine investments and leasing of mining equipment.

* This week, NYDIG acquired Arctos Capital. NYDIG provides a range of services including custody for institutional investors like Mass Mutual.

Explore

* Did you know you could passively earn bitcoin by shopping?

* This week my Fold card arrived! Fold is a bitcoin rewards debit card. I’ve been using the app to buy Amazon gift cards which I use for my regular shopping. Now, I have the card so it’s easier than ever.

* I’m excited to #StackSomeSats (FYI: sats are the subunit for bitcoin like cents is to dollar except 1 bitcoin = 100 million sats)

* Check it out: Fold

* Did you know there are also crypto credit cards too?

* I used credit card points to pay for my honeymoon at a 5-star luxury island resort. It was amazing.

* But wouldn’t it be cool to get rewards for an appreciating asset? Enter crypto credit cards.

* BlockFi, Gemini, and Crypto.com have or are launching crypto credit cards. Check them out and get in line!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

Mid April usually means one thing tax day. This year, the IRS has postponed the deadline by a month. Get on it if you are running behind!

This year, mid April is all about COVID vaccines. Good news is that I’ve now received my second dose of the COVID vaccine. Bad news is that I’m feeling a bit under the weather. Instead of preparing a separate issue for the “Explore” section, this week, I touch on two topics that have been on my mind. Let me know which one you think I should do a deep dive on next. As always, I welcome your feedback. Thanks y’all!

News

* Coinbase goes public

* Coinbase shares ended their first trading day priced at $328 implying a valuation of $68B. That puts them in between UBS and Goldman Sachs. 

* Unlike during an IPO, Coinbase did not issue additional shares for its direct listing. The only shares available were sold by employees and investors. 

* Notably, the CEO sold 1.5% of his shares for $290M. A few eyebrows were raised when the CFO sold all of her shares for about $100M. 

* Blackouts in China slows bitcoin mining

* Xinjiang and Sichuan provinces of China account for more than 50% of global bitcoin mining activity 

* A series of accidents at coal-powered plants in Xinjiang led to government mandated power outages 

* These outages led to ~20% drop in bitcoin mining i.e. computing power to secure the network. This underlines the risks of concentration and need for greater distribution of bitcoin mining capacity around the world.

* US minority speaker says bitcoin is geopolitically strategic

* Kevin McCarthy, the Republican minority speaker of the US House of Representatives, stated that bitcoin and other digital currencies are geopolitically strategic. 

* I see 2 strands to pull here:

a) China could drive adoption of its new digital currency by strong-arming aid-receiving countries and business partners. This could challenge the US dollar status as the global reserve currency.

b) As more US investors embrace bitcoin, the risk rises of contagion spreading if a catastrophic event impacted bitcoin.

* Citigroup’s former chairman joins crypto payments firm 

* Dick Parsons became the first member of Celo’s external board. This is a significant vote of confidence in this 4-year old organization. 

* Celo aims to empower anyone with a smartphone anywhere in the world to access financial services, send money to phone numbers, and pay merchants 

* Celo’s ecosystem includes a variety of applications including stablecoins. Stablecoins are pegged to the value of another commodity like the US dollar. They improve on the existing system by enabling near real-time

* Canada approves 2 ethereum ETFs in one day

* Two months after Canadian regulators approved Bitcoin ETFs, they have now approved 2 ethereum ETFs

* A crypto ETF mimics the price of the cryptocurrency. This gives investors exposure to the cryptocurrency without buying the asset class. 

* Additionally, in South Africa, there are plans to launch a bitcoin ETF. Closer to home, the US SEC still has not approved a bitcoin ETF. Dozens have been proposed over the past 8 years, there a couple under review.

Explore

* Future of faster payments: Who will win?

* The Federal Reserve Bank and US banks are investing millions (probably billions) in implementing a faster payments network. This new system will provide near instant final settlement within the US.

* Unbeknown to most, when you swipe your card at your favorite grocery store, the money does not instantly get delivered to the merchant. This process can take a couple days to several weeks! The new solution will shrink that to seconds.

* In parallel, crypto enthusiasts are building out the lightning network on top of bitcoin blockchain. One start-up, Strike, is working to build a global payments network that would enable low-cost, final settlement of domestic and cross-border payments without using the likes of Visa or banks.

* Will these two systems co-exist? Will regulators or merchants prefer one to the other? What is going to happen to traditional cross-border heavyweights like Western Union? I’ve got so many questions. I might do a longer study into this.

* Bitcoin mining - a driver for sustainable development?

* It’s been argued that bitcoin mining is the most profitable use for stranded energy that is otherwise not economically feasible to develop or export.

* Oil and gas companies in the US and Canada are using gas that would have been flared to power bitcoin mines

* Could this be extended to lower carbon energy? Could bitcoin mining subsidize the development of hydroelectric dams or solar farms in Africa? So many questions here! I might do a longer study into this too.

Let me know what you think and if you have a preference for which area I should dig in next. Until next time, I hope you stay safe and healthy. Have a great week!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

I hope you had a great week. It’s been sunny in Texas, almost feels like summer is here. Meanwhile, the crypto news cycle continues heating up. Next week is the much anticipated Coinbase IPO. But first let’s dive into some highlights from last week. As always, I look forward to your feedback. Let’s go.

News

* Coinbase had a monster Q1

* Coinbase reported 56M users and 11% of all crypto assets are on their platform (both retail and institutions). Some analysts have upgraded their valuations over $100B ahead of Wednesday’s IPO

* Lately, I have been thinking about two flavors of the Coinbase effect 

* Messari Research reported that tokens listed on Coinbase average a whopping 91% price increase in the first 5 days! For more information check this out this link.

* The IPO is going to mint a fresh batch of millionaires. Real estate agents and car dealerships are salivating. I also expect to see an exodus of talent as employees explore new opportunities. Some may become angel investors and pump more funds into the crypto sector.

* Crypto Twitter is divided on whether or not to invest in Coinbase. Bitcoin maximalists believe bitcoin will outperform Coinbase in the long run. They are also fundamentally opposed to the centralized exchange.

* Pragmatists argue that Coinbase is a key part of the ecosystem. Besides, whenever crypto prices inevitably fall, Coinbase may prove more resilient than bitcoin. After all, Coinbase profits from transactions irrespective of the price.

* Q1: Robinhood had more crypto traders than Coinbase

* In Q1, 9.5M Robinhood customers had crypto transactions each month. This was ~50% higher than Coinbase’s monthly users (6.1M). 

* Unlike Coinbase, Robinhood does not charge a commission for cryptocurrency transactions. However, Coinbase pays interest on deposits in its account and covers more cryptocurrencies. 

* Robinhood and other companies with existing customer bases have an advantage over crypto native solutions that have to work harder to win each customer. This begs the question when will retail banks and other FinTechs enable customers to buy, sell, and store cryptocurrencies?

* Crypto crosses $2T 

* The total value of all cryptocurrencies topped $2 trillion for the first time this week.

* Bitcoin accounts for more than 50% of this value. This week we reached a milestone where 100 cryptocurrencies were valued at $1B or more 

* In Q1, the top 5 gainers were: BinanceCoin, Cardano, Uniswap, Polkadot, and Ripple. I hope to dive into these in the future.

* Crypto climate accord

* The Crypto Climate Accord is styled after the Paris Climate Accord. It has an ambitious goal to achieve net-zero emissions for the entire industry, including eliminating all historical emissions by 2030. 

* Ripple, CoinShares and ConsenSys have joined the accord. I expect some other prominent players will follow in the months ahead.  

* The environmental impact of cryptocurrency mining has been a hot button issue in recent months. CoinShares research found that 74% of cryptocurrency is powered by renewable energy largely due to surplus hydroelectric capacity in China. Critics think it is lower.

* The push to net-zero emissions may have implications for new miners aiming to use coal, gas and crude oil to power their operations

* Chinese companies pivot to crypto

* China is ground-zero for cryptocurrency. Much of the mining capacity, miner production, and national digital currency innovation is centered there. This week, two Chinese companies made significant pivots to become players in the cryptocurrency industry.

* The9, a publicly traded gaming company in China purchased $6M computers to become a cryptocurrency miner 

* 500.com, an online lottery company in China, spent $100M to acquire Bee Computing, a manufacturer of cryptocurrency mining computers 

* These moves are even more aggressive than what we have seen in the US. Stay tuned.

Explore

* Bitcoin Billionaires: This week, I a wrote book review on this book. I really enjoyed reading it and I’m convinced one day it will be made into a movie. It tells the story of the Winklevoss twins and the history of bitcoin. Check it out my review here

* Bitcoin & Black America: I previously shared a book review on this book. It argues that African Americans have a lot to gain by embracing cryptocurrencies and decentralized finance. Check out my review here.

* What should I read next? Let me know if you have any suggestions.

* Crypto Course: This week, I’m starting a 3-week crypto course. I’m super pumped to learn more. I’ll keep you posted on how it goes.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com

Today, I am doing a special session. It’s a review of a book called Bitcoin Billionaires by Ben Mezrich. 

Accessibility: A

Learning: A

Enjoyment: A 

Overview

Bitcoin Billionaires is one of those books you could see being made into a movie. It’s not that far fetched given that the author, Ben Mezrich, also wrote the award winning “Social Network”, the movie about Facebook. In some ways, it feels like Bitcoin Billionaires continues that story except the focus is now shifted to the Winklevoss Twins. 

Tyler and Cameron Winklevoss became famous as the tall, Harvard-educated, Olympic rowers who alleged that Mark Zuckerburg ripped them off while founding Facebook. The author weaves the bold story of how the twins became among the first bitcoin billionaires along with a colorful dose of bitcoin history. The Winklevoss twins founded Gemini, one of the largest US based crypto-exchanges and Nifty Gateway, a leading NFT marketplace. The book lays bare the tension between ideologues like Ronald Ver and businessmen like Tyler and Cameron. Additionally, key developments like the Mt Gox hack and the Cyprus banking crisis also feature in the story. Mezrich does a great job making bitcoin history fun to learn. 

Key stories

* Storing bitcoin in banks: The twins have taken extreme measures to safeguard the private keys to their mountain of bitcoin. The private keys - a long alphanumeric code - are split up and stored in bank safety deposit boxes across the country. Funny how banks are keeping crypto safe probably without them even knowing it. 

* 2013 Cyprus banking crisis: What would you do if you woke one morning and 10+% of your life savings were gone? This was the reality for bank account holders in Cyprus in 2013. The banks were too big to fail but the government didn’t have the funds to bail them out. As a last resort, the government dipped into all bank accounts while everyone slept. This set off a bitcoin price rally as consumers lost confidence in fiat currency. Flashforward to 2021, the US has printed unprecedented trillions of dollars related to COVID. There are rising concerns about the US government spending and the dollar’s value. Part of the current bitcoin bull run is motivated by investors seeking shelter for the funds.

* Silk Road takedown: Ross Ulbricht founded Silk Road to enable anonymous transactions. It quickly became synonymous with drug smuggling, human trafficking and money laundering. Silk Road used bitcoin as its primary currency until it was shut down in 2013. However, the damage was already done. Bitcoin had become associated with criminals and the dark web, a shadow it’s still struggling to shake today. 

* Silicon valley vs crypto: Early bitcoin enthusiasts were outsiders in Silicon Valley. The Winklevoss twins were occasionally shunned by folks wary of not upsetting Mark Zuckerberg and Facebook. This outsider mentality is helpful as an innovator and an entrepreneur. Along the way, bitcoin became less fringe and much of Silicon Valley has embraced cryptocurrency to some degree. Google has gone from banning crypto ads to adding cryptocurrency prices in Google Finance. 

* Bitcoin ETF: The Winklevoss twins began the quest to launch the first US-based bitcoin ETF in 2013. 8 years later, there are now 2 Canada-based bitcoin ETFs but none in the US. Major firms like Fidelity have now also proposed ETFs. I think the SEC will eventually approve a US-based bitcoin ETF. This struggle highlights some of the difficulties associated with innovation and introducing a new asset class. 

* Purists vs Pragmatism: There is some tension within the bitcoin community between purists and pragmatists. Some bitcoin purists are wary of the existing banking sector and governments. They would prefer to operate in a peer-to-peer, permissionless, tamper free environment without government oversight. On the other hand, pragmatists prefer to operate within the existing banking sector and seek government regulation to foster growth.

* Charlie Shrem: was the brains behind BitInstant. In 2012, BitInstant was the leading vehicle by which early adopters purchased bitcoin via a network of over 700,000 store locations.The author suggests that 23-year old Charlie was caught up in the tension between purists vs pragmatism. He was ambivalent about enforcing KYC (Know-Your-Customer) requirements and alerting authorities to suspicious transactions.  Ultimately, Charlie was arrested and imprisoned for money laundering. He was released in 2016. His fall from grace highlights the importance of coloring within the confines of the law and delegating (he served as CEO and Compliance Officer). The optimist in me is rooting for a comeback story for Charlie. Let’s see. 

Conclusion

I really enjoyed Bitcoin Billionaires. I probably wharfed it down in a couple long reading sessions. The book is accessible and engaging. I highly recommend it for folks who are new to crypto and want to learn about the history and key characters. One day there will be a movie made about the times we are living in. Let me know what you think. As always, I appreciate book recommendations or any other feedback you might have. Have a great day!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit afolabio.substack.com