Crypto IRL Afolabi O

Preamble rant:
The recent collapse of FTX, a large crypto exchange, and its associated entities, left many of us disappointed and disgusted with flashbacks to Enron and Lehman Brothers. Nothing is new under the sun. Unfortunately, whenever humans are involved, there is a potential for bad actors to make poor choices that wreak havoc. This has proven true across industries, countries, and time. But regulation and controls can help safeguard the little guy. I expect more regulation, legislation, and guidelines in the months and years to come.
Still, I worry that the wrong lessons are being learned. Some folks might see the FTX implosion as vindication that “crypto is bad”. Others might see it as the death knell for crypto and blockchain technology at large. This is a mistake. Technology is neither good nor bad. Humans use technology for good or bad. That’s an important distinction. One of my takeaways is to double-down and continue uncovering ways in which crypto and blockchain technologies can solve real-world problems. Let’s go!
Giant maps and summer road trips
When I was a kid, my family would go on road trips every summer. It was a great adventure. From time to time, we would pull over to the side of the road while our parents struggled and fumbled through giant fold-out maps. This was Nigeria in the 1990s. There was no internet. The maps were sometimes outdated. As you can imagine, we got lost a couple times. One day, we narrowly escaped being detained by the military because we inadvertently were driving towards Aso Rock, which was then the presidential palace of Abacha, one of Nigeria’s brutal dictators! Yikes!!
Today, I can’t remember the last time I opened up a giant fold-out map. Thank God for Google Maps! I now use it every day to find the optimal route for my commute. It’s been a massive time-saver as I’ve learned to deal with the joys of New Jersey’s clogged up highways. If you are like me, you might not have realized that some companies such as Uber pay Google to embed Maps in their products. Some other companies use Google Maps to optimize the distribution of their products. It’s really important for these companies that Google Maps is accurate and frequently updated.
As much as I love Google Maps, it’s not perfect.
Google Map’s gaps
I am going to highlight two gaps with existing mapping services: (1) Updates and (2) Ownership.
1. Updates
Google has done a great job mapping out the world. However, new roads and buildings are constructed every day, new businesses emerge with new signage. Logically, Google Maps prioritizes map updates for high population cities. Thus, Google updates Street View and Satellite pictures of big cities like London at least every year while smaller cities like my ancestral hometown, Ijebu-Ode, might be updated every couple of years. Is there a better solution?
2. Ownership
In 2013, Google acquired Waze for $1B. Waze was a fast-growing Google Maps competitor that utilized an army of volunteers to submit real-time traffic updates and review maps. Over 420,000 people volunteered to edit Waze’s maps. Additionally, Waze had ~100 employees at the time of acquisition. But get this: the average Waze employee received $1.2M after the acquisition but the volunteers received nothing. Ouch. Is there a better solution?
Introducing Hivemapper
Hivemapper is a decentralized map built by people using dashcams. It solves both of the problems - updates and ownership - outlined above by providing crypto-incentives and technology to anyone interested in participating.
Did you know that each photo in Google Maps’ Street View was taken by a Google employee in a specialized car with a 3D camera? One can imagine that the cost would be astronomical. Wouldn’t it be better if we could crowdsource images from drivers on their daily commute or road trips? Imagine if just 1% of all drivers did this. They would continually map every new highway off ramp, new small business, freshly c

If you are like me, then you were a little awkward in college. Here’s an example of an interaction I had on campus as I walked from my dorm to class.
Pretty college co-ed: “Hey! Do you want a free t-shirt?”
Me: Uh! (Awkwardly looks away. Runs in the opposite direction.)
Don’t hurt me🤕
It’s complicated.
Let’s flash back a few months before this awkward interaction.
So many thoughts rushed through my head as I packed my bags. I wondered if my American professors would understand my Nigerian accent. I wondered if I would easily make friends, maybe meet a nice girl. But then my mother rocked me back to earth as she exclaimed “Please stay away from credit cards o!”. Apparently, someone’s son was drowning in credit card debt. I guess he thought the money was free.
In Nigeria, less than 3% of consumers have access to credit. It’s a stark contrast to the US, where 83% of adults have credit cards (Federal Reserve). My mum’s friend’s son had recently relocated from Nigeria to the US for college. He was woefully unaware of how to manage credit. He would stop and chat with the pretty college co-eds waving free t-shirts in front of the gym. Eventually, he signed up for a couple of credit cards. Then it all went downhill. He didn’t stand a chance.
And so I stayed away from credit cards.
The case for credit 💳
But my views have evolved. I no longer see credit as a tool for self-destruction. Rather, I see credit as a tool - it’s neither good nor bad - it’s just a tool. If used properly, credit could help people build wealth and live healthier and happier lives. But if used improperly, it could lead to financial ruin. Credit is a double-edged sword.
Living in Nigeria meant you paid cash for everything. The words “mortgage”, “car loan”, “student debt” and “credit card bills” were not in our vocabulary. No one had credit! And so you paid 100% cash when you bought a house or a car. The lack of credit also meant that no one had a credit score. So if you wanted to rent an apartment, you would have to pay 1-2 years of rent upfront. Needless to say, many of my cousins lived with their parents well into their late 20s and early 30s.
Can you imagine if the US had the same setup as Nigeria? There would be untold pain. According to the National Association of Realtors, the average new home buyer in the US paid just 7% of the total purchase price as a downpayment and took out a loan for the rest. Similarly, according to Statista, 85% of new car purchases in the US are financed. Collectively, Americans owe more than $1.2 trillion in car loans. In Nigeria, the total is closer to $0.
The ability to thoughtfully take on credit could save lives. Many hospitals in Nigeria require full payment before treatment is rendered. Too many people have needlessly died while family members frantically rushed to raise funds to pay for life-saving treatment. It’s desperately heart-wrenching.
The ability to take on mortgages could help many families own their homes and start building multi-generational wealth. Construction loans also enable investors to deliver more housing units to eager customers.
Access to credit could enable a business owner to grow and sustain their business. Businesses might need loans to purchase raw materials to fulfill large orders. Businesses could even offer credit to customers, enabling them to buy more products. Credit could provide the runway a growing entrepreneur needs to take off.
The list could go on. The bottom line is that access to credit could help grow the economy while enabling people and businesses to lead more prosperous lives. If this is true, then why do only 3% of Nigerians have access to credit?
Problems dey 🚧
My sense is that credit penetration is low for a couple of key reasons:
* Structural: Nigeria does not have a well-established credit score system. In other countries, credit scores are linked to a national identity number ex Social Security N

Preamble
My wife and I recently packed our bags and relocated to New Jersey! Texas was good for us but now we are on to our next adventure in Greater New York City. Would love to meet up if you are in the area.
It’s been fascinating observing people’s reactions when I say I work in crypto. Some acquaintances immediately start walking me through their crypto portfolio while others clutch their pearls and flee for dear life. Jokes aside, I am often the first person they have met who works in the space. Sometimes, I get the sense they don’t quite know what to make of me. Crypto’s unsettling reputation has not been helped by the recent market downturn, hacks, and bankruptcies. My singular refrain has been that “the underlying technology could solve real-world problems, focus on that”.
But you can’t bury your head in the sand and ignore the world around you. If you fail to study history, then you are bound to repeat the same mistakes. We are living through the early days of Crypto’s history. Let’s learn from this moment lest we fall prey to the same dragons.
Heartache 💔
Celsius - a prominent centralized crypto lending company - filed for bankruptcy on July 13, 2022. Customers had been unable to withdraw their funds since June 12, 2022. It now looks unlikely that they will ever reclaim all their funds. Some devastated customers have written letters to the judge presiding over the bankruptcy proceedings. These letters are gut-wrenching. Here are excerpts from two of them:


But how did we get here?
Celsius: Background🔎
Celsius was founded in 2017 by Alex Mashinsky (CEO), Daniel Leon (former COO, now Chief Strategy Officer), and Nuke Goldstein (CTO) in Hoboken NJ. Celsius provides customers with high interest-bearing accounts for cryptocurrencies and crypto-collateral-backed loans.
High interest-bearing crypto accounts
Example 1: Johnny cashed out some of his cash savings and stock investments to buy 1 bitcoin on Coinbase. He then sees an ad from Celsius offering 17% interest rates for customers who deposit bitcoin with the company. He looks at his regular bank account and is reminded that Bank of America is only offering 0.1% interest. It’s a no-brainer! Johnny moves his 1 bitcoin from Coinbase to Celsius to earn high interest.
Crypto-collateral-backed loans
Example 2: The price of bitcoin has more than doubled. Johnny is feeling good about his investment. Time to finally buy that engagement ring he has been eyeing. The price of bitcoin is $50k but he only needs $10k. However, Johnny doesn’t want to sell his bitcoin because he believes the price will be much higher in the future.
Step 1: He transfers 0.3BTC valued at $15k as collateral for a $10k cash loan.
Note: (a) There are no interest payments on the loan but he has 1-year to pay it back. (b) There are no credit checks because the loan is overcollateralized with a loan to value (LTV) ratio of 67% => $10k loan / $15k crypto collateral.
Step 2: Celsius will monitor the LTV ratio as the price of bitcoin continues to fluctuate. If the price of bitcoin drops deeply, Johnny will have 24 hours to add more collateral or pay down the loan if the LTV hits the predetermined threshold ex 90%. If Johnny fails to bring the LTV back to an acceptable range say ~67% within the prescribed time then Celsius has the right to sell his collateral for cash.
Besides lending, Celsius generated revenue from token sales, bitcoin mining, and discretionary trading of cryptocurrencies. As of June 2022, Celsius had lent out $8 billion to customers and had $12 billion in assets under management. The company had 450 employees and reportedly 1.7 million account holders.
How did it go wrong?⚡
TLDR: Celsius CEO said the company went bankrupt due to “..certain poor asset deployment decisions”. Basically, weak risk management. Unfortunately, this does not appear to be an isolated incident, rather, tales of poor decision-making and under-resourcing are emerging fro

I’ve got a confession. (Cue Usher’s hit single “Confessions”)
I am not exactly sure what the metaverse is. There I said it. I feel so much lighter lol :-)
Last year, “metaverse” burst onto our collective lexicon when Facebook announced it was reinventing itself as Meta. Mark Zuckerberg produced an hour-long video explaining what the metaverse was and how Facebook was going to engage in it. I didn’t watch the video then but I did see a few clips. It felt important. I felt like it must be a big deal if one of the world’s richest men was betting his ENTIRE fortune on it. I didn’t want my ignorance to cost me this opportunity.
So I started a little exploration. I spent part of my New Year’s Eve in the Decentraland metaverse. I started buying a few metaverse tokens and invested in a metaverse-themed ETF. During the hype, I even considered buying some virtual land in the metaverse. Now to be clear, my investments were pretty limited…way less than 1% of my portfolio.
But since Facebook’s fateful announcement, the world’s most prestigious investment banks and consulting companies have published a slew of reports on the metaverse opportunity. Citi Bank forecast that the metaverse economy could be worth $13 trillion by 2030. The Boston Consulting Group (BCG) had a less bombastic view, forecasting that the metaverse economy would be worth $1.3 trillion by 2030. To put things in context, in 2021, the total value of the US car and automobile manufacturing market was $83B. The bottom line is this - some smart folks are saying the metaverse could be at least 12 times the US car market in 7.5 years. No one knows the future but there is some consensus that the metaverse could be BIG business.
Ok…you’ve got me interested. But what is the metaverse??
I have been digging trying to learn more. I finally watched the Zuckerberg metaverse video. I listened to a bunch of podcasts, watched more YouTube videos, read some essays, and flipped through a couple of decks. I’m still organizing my thoughts and refining my thinking. Figured it might be helpful to share some of my preliminary thoughts. Let’s go!
What is the metaverse?
High school level definition
The metaverse is a 3D version of the internet. It is a convergence of the physical and digital worlds.
According to Matthew Ball, the metaverse represents the 4th wave of computing. The first three waves were mainframe computing, personal computing and mobile computing. So if the mobile era was defined by easy ability to get online, the metaverse era would be defined by always being online, this is called ambient computing.
College-level definition
According to Roundhill, the metaverse is the successor to the current internet that will be interoperable, persistent, synchronous, open to unlimited participants with a fully functioning economy, and an experience that spans the virtual and 'real' world.
TLDR: the metaverse is an immersive, interactive environment generated by a computer.
What is NOT the metaverse?
Did you notice that none of the definitions mention virtual reality headsets? That was a big surprise to me. I had originally imagined a future where VR headsets became as common as cellphones are today. While I think sales of VR headsets are poised to going to continue rising, they are NOT required to access the metaverse. In fact, some of the closest metaverse-like experiences in gaming are accessible via cell phones.
Side note - my jaw dropped when I recently learned that Meta sold 8.7 million Oculus VR headsets in 2021. That’s more unit sales than Xbox consoles in 2021! Do you have one? I’m thinking about getting one to test it out. Sales of these VR headsets have doubled each year. Now Meta is opening up physical stores so more people can experience it firsthand.
TLDR: VR headsets provide one way to access the metaverse but they won’t be the only way to experience it.
The metaverse must be experienced.
One of my cousins in Nigeria told me

Hey y’all!
This will NOT be a typical newsletter.
I started writing as a forcing mechanism to learn more about crypto. It has been fun. Along the way, I’ve learned a ton, made new friends, started Bitcoin mining, and got a new full-time job in crypto. Thank you for coming on this journey of discovery with me.
The vision of 5x5 Crypto was to simply explain the 5 most important developments in crypto in about 5 minutes. Lately, it has become a drag to consistently produce weekly updates. The truth is that I am no longer satisfied with just reporting news developments in crypto. I want to go deeper. I want to explore real-world use cases of crypto. I am curious about doing more analytical pieces. It’s time to dream again.
Introducing Crypto IRL
I am repositioning the newsletter. Introducing: “Crypto IRL”. My goal is to explore crypto in real life. I aim to produce 1-2 publications each month on a variety of topics. I have a list of topics that I want to explore and I can’t wait to dive in. Lately, I have been thinking about the metaverse, Bitcoin mining profitability, and crypto applications in Africa. Let me know if there are topics you would like for me to explore.
But crypto markets are crashing…
Yeah. Crypto markets have tumbled lately. My conviction is unchanged. I am still investing weekly. I had been waiting for a price crash since Q3/Q4 last year. But it seems that Crypto Winter has finally arrived. It was expected. Crypto has historically had multi-year cycles of “summer” (price rise) followed by “winter” (price crash)…with each new summer rising to a new high. Veterans say the Crypto Winter is when serious building happens. It’s the time when fair-weather fans fade into the background. It’s the time when one’s conviction is tested. It’s the time to go deeper and explore. This is the perfect time to pivot. Will you join me?
You don’t have to do anything. You will receive the new publication in your email. Please stay tuned. I hope you enjoy this new season. If you do, please be sure to forward it to your friends :-)
I hope you and your family have a wonderful week ahead.
Onwards & Upwards,
Afolabi




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

Hey y’all!
Did you hear the remarkable story of how an inexperienced passenger safely landed a plane when the pilot became incapacitated? Here’s some background:
I listened to the recording of the passenger calmly explaining the situation to the air traffic controller multiple times. I listened intently as the air traffic controller steadily guided the passenger to land the plane. And he did it! He safely landed the plane.
I was struck by how calm and measured the passenger was. He had a pregnant wife at home. This was a potentially fatal situation. His whole life was at stake! One might have expected to hear the terror, fear, and shock in his voice. There was none. I guess he is ‘built different’.
God forbid, if I were in a similar situation, I hope I can be as calm and measured as he was. How do you react when your world is turned upside down? Well, the crypto and stock markets have taken us on a downward heading rollercoaster these past few weeks. How have you dealt with it? Are you ‘built different’ too?
Thoughts on ‘Built different’
I am often intrigued by how multiple people could have the same experience but polar reactions to it. For instance, we have all experienced the recent plunge in the stock and crypto market, some folks have been writhing in pain and selling off assets while others have been pleasantly buying up investments at ‘bargain’ prices. There’s also a group of people who are steadily executing their investment strategy, unfazed by the market turbulence. I’m in the last group but I’m fixin’ to go bargain shopping.
In management consulting, we often heard the refrain “manage expectations”. It is key because disappointment occurs when our expectations fall short of reality. Increasing a company’s profitability by 20% within 1 year is neither good nor bad. It’s only when you factor in expectations that one is able to define the performance. If the company’s CEO was expecting a 30% increase in profitability, then 20% suddenly looks like a shoddy disappointment. However, if the CEO was expecting a 10% increase, then the 20% result is an impressive feat worth celebrating with bonuses and promotions. Managing expectations is key.
If you are a long-term subscriber, you’ll know that I’ve been waiting for “crypto winter” since the end of Q3 2021. You might also know that I’ll be unsurprised if the price of Bitcoin fell back to the $10k level or lower but then surge to new highs, dare I say six figures, in the next bull run in a couple of years. This is not based on any technical analysis. Rather, I have glanced at the historical performance of Bitcoin (a proxy for the wider crypto market) and recognized that large price swings are part of the process but over the long term, the price tends to go up. I’m managing expectations I’m in this for the long haul. Over the past seven Mays (2016-2022), the value of the S&P 500 stock market has increased 2x while Bitcoin price has increased 67x. Zooming out can provide a helpful perspective.
Tail events and a flight to quality
I recently read “Tails you win”, an article by Morgan Housel. He reminds us that most results are due to tail events.
For instance, out of 21,000 VC investments between 2004 and 2014, 65% lost money, 2.5% made 10-20x, 1% achieved more than 20x returns. Incredibly, only about 0.5% or 100 companies achieved the glamorized 50x returns. The vast majority of the industry returns are due to a tiny fraction of investments. We glamorize and idolize these investments and some of us even aspire to make similar 50x returns too. But the odds are not in our favor. Morgan’s analysis on the VC market was not shocking but I had not fully considered what he said next: that tail events drive the vast majority of results is a truism of nature and other disciplines.
Each human is a miracle. Just one sperm out of the millions deposited, gets to fertilize the egg and develop into a baby. Or consider tha