Some thoughts on crypto, blockchain, Web3, NFTs and the Metaverse

Side note: This article was written in December 2021 and first published in my 30 Days of Growth newsletter — you can subscribe to the newsletter here and get the eBook here. Please forgive any inaccurate data or things that might have changed.

Image Source: Kanchanara, Unsplash

Today I’ll like to share some thoughts on blockchain, cryptocurrency, the metaverse, NFTs, Web3 or whatever buzzwords are describing the ‘future of the web’. This is actually really long so let’s call it a lot of thoughts.

Before I go deep, I’ll like to disclose some biases.

1. I’ve worked for 2 of Africa’s largest crypto exchanges in the early stages — Bundle Africa and Buycoins Africa.
2. I studied information technology at university and took 2 courses in data networking. While I hated mapping out network IP addresses, it was a completely mind-blowing course on how the internet works.
3. I hold almost 40 crypto ‘coins’ or ‘tokens’ across many different types of projects — gaming, art, centralised & decentralised exchanges and more efficient blockchain networks.
4. I once lived about 8 months without income and relied solely on income from the rise of crypto.
5. The summary of these 4 things is that I have very strong opinions and some level of experience in this industry.

Let’s get started.

1. There’s a lot of noise today around blockchain technology. There’s way too much noise and too much hype and most of it is simply driven by FOMO — Fear of Missing Out. People simply don’t want to regret missing out on this wave, fundamentals are damned. I wish they would be more honest with themselves and the public about this.
2. I realise that these are very early days of this computing network or paradigm so you must forgive me for expecting too much. My expectations are always high when I use computers.
3. Blockchains are a new kind of computer network and database structure. Computing networks and databases have existed for a very long time. A database is a computer system that holds records. It is not true that blockchains cannot be manipulated to hold false records. This has happened several times already.
4. Blockchains can be a kind of decentralised and public computer network. They are not always public and/or decentralised. They can be private and centralised. The internet is one of the examples of a decentralised computer network — it spans countries of the world and allows people to connect to one another. Telecommunications networks(for phone calls and SMS) are also a type of decentralised network. Before then, you had the Telegraph.
5. Centralised platforms on top of decentralised networks almost always win. Today’s leading internet companies like Netflix, Facebook, Google, Snapchat, Twitter, Uber and others show us what happens when people are asked to connect to themselves via open protocols — they don’t communicate. Blockchain technology today is way too technical(it will remain the same) for my parents to use — there are too many parts involved in moving value from one wallet to another wallet.

It’s very important to study computing history to understand what’s happened and predict what will happen. New computing networks are often invented and spearheaded by researchers who create rules for how one computer on the network can talk to another computer — these rules are called protocols. On today’s internet, you have protocols like HTTP — hypertext transfer protocol, SMTP — Simple mail transfer protocol, TCP — Transmission Control Protocol, DNS — Domain Name System and many more. Because these researchers are trying to solve a communication problem, they often can’t afford to care about the user experience. Sometimes, it also doesn’t matter — there’s no use case for my mobile phone to directly connect to MainOne’s landing cables in Lagos. There’s also no use case for me to directly enter Google’s IP address(216.58.223.238) in my browser. Google.com is more memorable and easier to use.

The growth of previous computing networks like the internet and telecoms networks shows us that groups of people in form of companies will begin to use these networks, maintain the networks and abstract the protocols that have been created. They will also figure out how to make money from these networks. Their work makes the computing network more accessible and usable by people. We must remember that most people in the world aren’t computer science or electronics researchers. They just want to send messages and transact.

In the early days of the internet, it was a wild west to view a webpage. One of the early projects was Mosaic — which was a browser so you could enter an IP address or a website’s name(URL) to view the website. Mosaic was developed by Marc Andreessen and Eric Bina. Today, Andreessen leads Andreessen-Horowitz — one of the top venture capital firms in the world that invests in technology companies that operate on the internet. It was also difficult to find where to go to find information. Many ‘search engines’ like Altavista emerged. Today, Google is the most dominant tool for finding information.

I strongly believe this will be the same for crypto. In the last year, centralised exchanges like Binance, Crypto.com and FTX have pretty much cannibalised decentralised exchanges like Pancake swap, Bakery Swap and Uniswap. The reason is simple — the decentralised exchanges are anonymous and autonomous organisations where anybody can list anything and anybody can buy it. There is no customer support, no one to hold accountable and no one to report theft or fraud to. Wallets like Metamask, support transactions on these decentralised exchanges. Metamask earned $200million in fees in the last year. Comparatively, Binance just launched a $1billion fund to support projects on the Binance Smart Chain. Binance doesn’t publicly reveal its revenue figures so imagine how much it makes in fees. People feel safer trusting an authority they can hold accountable than a figure that they simply cannot. It’s like telling me to withdraw all the money from my bank and give it to a stranger.

6. Crypto exchanges are banks. People often forget that cryptocurrency exchanges(where you can buy, sell, exchange, loan and lend crypto) are just like banks. To exist, they must charge fees on transactions and those fees can range anywhere from reasonable to exorbitant. Luno charges South Africans 2% to sell crypto — this is ridiculous.

7. The opportunity for blockchain. These are what I believe the true opportunity for blockchain is:

• Better User Experiences — the user experience for cryptocurrency transactions needs to be much better. To transact on exchanges, I have to move so much money around and pay so many fees that it makes no sense at all. There are also too many confusing terms that need to be abstracted. Like I said, centralised applications will emerge strongly — a simple use case is sendcash.africa which allows Nigerians to send money to the US and other countries via bank transfer. Beneath its operations is a crypto transaction. Users of Sendcash don’t touch crypto.
• Financial inclusion for the ignored. Africa and other parts of the world have been ignored in global transactions and global trade — it’s almost as if we do not exist. In cases where we’ve been served, we still face limitations to trade because our countries don’t export enough and we don’t have enough dollars to participate in global trade. As a Nigerian, I’m limited to $100 monthly value of purchases outside Nigeria. Several times, I’ve simply gone to Bitrefill, moved crypto into my wallet and purchased a gift card so I can make purchases outside Nigeria.
• Legality and regulations. Many things in crypto are still unclear today. What’s a security? What is legal tender? How do I file taxes on my crypto returns? Do I pay taxes if I earn interest from a DAO I’m in? How do I verify that the token of a crypto project is legit and I can trust the parties to deliver on their promise? The crypto and blockchain community has to work with governments to define these things and help them understand how to make sense of it. Claiming you’re doing things to get away from the government is very unrealistic and far too idealistic.
• Security. This is two-fold. The first is that it’s ridiculous to tell me that the dominant computing platform in the future is one where I cannot reverse or undo a transaction — a mechanism needs to exist to solve this. The second is that there is the opportunity to help government security agencies, crypto exchanges and individuals trace transactions across blockchains and identify hackers, thieves and scammers. Chainanalysis is on the right track but there needs to be something more robust.
• Education. I see a lot of articles on the web about blockchain and crypto but I’m yet to see a very serious and strong push for people to develop this technology. In the early days of HTML5 and Android, there was heavy grassroots work in teaching developers and non-developers how to use this tech. All across Nigeria, organisations came together to build the next version of the web. I’ve seen some glimpses of Solana hosting hackathons and dev events but yet to see the same for other blockchain projects — this is despite them having all of the money to actually do these events. Again there’s too much FOMO compared to programmes.
• Computing Efficiency. This is the real work. Many blockchain efforts are simply energy inefficient but this is how all computing networks start out. There’s a massive opportunity in making these new networks far more efficient so we can transact faster, better and cheaper over the internet. Looking at you Ethereum. There are people doing fantastic work here like Solana, Algorand, Circle and Celo.

8. Anyone that claims to bank the unbanked is simply lying. There is too much complexity today in using crypto for anyone to make that claim. Is it people who can’t read enough to open bank accounts that will hold 16 figure address wallets where money cannot be reversed?

9. Things it will not fix. The one thing I don’t like to see is people highlighting a problem on the internet today and saying ‘Web3’ fixes it. It will not fix racism or systemic prejudice against minorities. It will not fix crony capitalism. It will not fix extremism, populism or fake news spreading across the internet. The ability to vote as part of a DAO doesn’t fix much either. Most people don’t have the capacity, knowledge and experience to decide the future of computing platforms. Imagine putting the future of Google in the hands of its 1 billion users who just want to search and move on?

10. Governments will come in. As we’ve seen with all the computing networks that have come before, governments will regulate crypto. Whether governments define who gets to create tokens, how they get sold or who gets to mine what in what country. Governments will eventually come together and work together to decide how this new computing paradigm will work and what the future should look like. It’s important to remember that governments have always met and made agreements on many different things in the world today — this wouldn’t be different. I hope they call it — The Satoshi Treaty

11. There is something that bugs me about crypto maximalists. They’re often in countries with very strong justice systems and it makes me feel very weird. Why does someone who’s a billionaire in a country with a strong justice system want me to move my money into a network maintained by people I don’t know and who don’t owe me any legal obligations? Last year, hundreds of Nigerians were locked out of their bank accounts and their monies were frozen for donating towards the End Sars protests. This rarely happens in Europe and North America so why are people in Europe and North America trying to hide their money? Maybe they don’t want to pay taxes? These are just questions I ask myself.

12. Mark Zuckerberg threw us in a frenzy. Mark Zuckerberg came out of nowhere and announced ‘the metaverse’ and the name change from Facebook to Meta. What the metaverse is and is not remains elusive but I don’t know that it’s games that we’ve been playing and earning bonuses for years now that’s the future of anything. Why? If you’ve been an avid gamer, you already know this exists.

What Mark Zuckerberg did is what communications experts call ‘owning a narrative’. By announcing his intentions and changing the company’s name, it’s almost impossible to talk about this topic without referencing Zuck or Facebook.

13. The bubble will pop. Like we saw in the dotcom boom, there are hundreds of companies who are claiming to be crypto organisa1tions but have no underlying blockchain infrastructure. They’re simply driving on Fomo and hype to collect money from investors and unsuspecting members of the public(via token sales). Just like in the dot-com boom, we will find that many of these projects are either fake or unrealistic and they will die. If you’re just getting into crypto, this is the 4th wave of crypto — in the last 3 waves, many projects have been abandoned after the initiators went away with millions of dollars in token sales. This isn’t always a bad thing. A bubble bursting creates room for maturity of any technology or idea — there’ll be more serious and useful projects. It just sucks that people have to lose so much money for us to get there.

So these are my thoughts on crypto, blockchain, web3 and the metaverse. Thank you for reading. I hope it was very useful. WAGMI!

This article was written in December 2021 and first published in my 30 Days of Growth newsletter — you can subscribe to the newsletter here and get the eBook here. Please forgive any inaccurate data or things that might have changed.